Private Capital In Trade.

Private Capital in the USSR -1927
State publishing house

Translated from the Original- no omissions

Private Capital In Trade.

Production and credit base.

The role of private capital in trade is based not only on the intermediary trade in its products of state industry, but also on private capitalʹs own production in industry and agriculture, as well as on its participation in transport.

In the field of industry, as we saw above, the share of private capital accounts for about 10% of gross output (more precisely, up to 12%), not less than the same amount in construction and forestry, and close to this in water and road transport. in agriculture, the capitalist share includes up to 10% of gross output and up to 15% of marketable output.

The second prerequisite is the credit base, in particular the capitalist credit capital. What is the amount of private credit capital, i.e., that which is transferred by its owners to other branches of the private economy or to other owners in general, has not been accurately calculated. Lending in agriculture with livestock and implements has already been discussed in the section on (agriculture. For industry and trade, there are P. Kutler’s calculations according to the latest Narkomfin questionnaire, published in No. 5, dated December 5, 1926, of the journal “Finance and National Economy ʺ. Of these, we (now we are interested in calculations for trade. This questionnaire covered over a thousand enterprises according to their balance sheets as of October 1, 1925. The questionnaire was carried out by financial inspectors who selected enterprises that they considered typical in their areas. The surveyed enterprises cover 3.2% of all taxed private turnovers (for trade and industry together), and these data were recalculated by P. Kutler in relation to the entire private industry and to all private trade (each separately). The Peopleʹs Commissariat of Trade 239 balance sheets of private trading establishments, also on

October 1, 1925. In both calculations, mutual settlements are deducted, i.e., the remainder is shown ok funds attracted to private trade from other private individuals, minus the fact that other private individuals owe private traders (comrade Strumilin’s calculation results are given in the collection “On the Ways of Socialist Construction”, M., 1927, p.‐134 135). Both counts cover relatively little material (although they consider it typical), but more massive data do not yet exist at all. According to the first estimate (Comrade Kutler, data from Narkomfin), the net balance of credited private capital placed in private trade amounted to almost 200 million rubles as of October 1, 1925. According to the second calculation (comrade Strumilin, data of the Peopleʹs Commissariat of Trade), on the same date the same amount was about 135 million rubles. Of these two quantities, out of caution, we take the second as the smaller one.

According to Gosplanʹs ʺControl Figuresʺ (p. 374), the amount of private trade intermediary turnover grows from 1924/25 to 1926/27 by 42%. The actual growth, as we will see, turned out to be somewhat higher and should be taken at least 50%. Accordingly, the amount of credit funds attracted to private trade from private owners should by now (by the last quarter of 1926/27) reach approximately 200 million rubles. (Again, after deducting what private trade itself owes to private owners, that is, the net balance or the so‐called ʺbalanceʺ).

Moreover, private trade in certain (and considerable) amounts is financed by the state in our country. State funds placed at the disposal of private commercial capital consist of three parts.

First, the commodity loans provided by the state industry, which amounted to over 190 million rubles. in 1925/26, according to the estimates of the Peopleʹs Commissariat of Trade according to the Supreme Council of National Economy (including 179 million rubles from state industry and 13 million

rubles from cooperation. See pp. 111‐112 of the ed. SSR, Moscow, 1927).

At the same time, a significant part of commodity credits consists in the issue by industry to private traders on credit of salt, kerosene, and similar so‐called ʺdifficultʺ goods (the main

ʺdifficultyʺ is the absence of a passionate desire on the part of the co‐operative bodies to trade these goods in view of the more stringent regulation of prices here and low profitability). their trade). Commodity credit provided by state industry to private trade is usually not particularly long‐term, but one batch of goods replaces another, so that, in general, up to 190 million rubles are fairly constantly linked in lending to private trade. working capital of state industry and cooperation.

Secondly, private trade receives government cash loans. In the second section (the chapter on state monetary credit), we saw that on October 1, 1926, private economy from state funds (through state banks and through the OVK) in the form of direct and indirect monetary credits together received at least 100 million rubles. (except for loans for the purchase of government loans). Of this, at least half must be considered for trade (the rest for industry and transport; credit to agriculture through the system of agricultural credit is not taken into account at all).

The third source of power for private trade in public money credit is the system of advances that government agencies issue to private producers. Here only a very rough estimate can be made according to the data of the Peopleʹs Commissariat of Trade, published by Comrade Dvolaitsky on page 130 of the collection On the Ways of Socialist Construction. The total amount of state and cooperative procurement of agricultural products in 1925/26 amounted, according to these data, to about 1,700 million rubles. red. Of these, a part was prepared through private buyers, parasols, etc., who are agents of state and cooperative bodies. For example, in 1924/25, 40% of flax

harvested by state agencies and cooperatives was harvested through private buyers and in 1925/26 ‐ 15%. In other industries, it sometimes happens that more on average can be considered at least 15‐20%, that is, in the amount of about 300 million rubles. This will give an amount of advances of about 100 million rubles if we add here advances to private traders in the forestry and construction industry for the purchase of building materials by contractors. In total, private trading capital receives loans from the state in the amount of up to about 350 million rubles. and even about 200 million rubles. attracts private credit capital, and also relies on that share of capitalist production in industry and partly in agriculture; economy, which was discussed above (and the private credit used by private trade is partly credit from private industry). and even about 200 million rubles. attracts private credit capital, and also relies on that share of capitalist production in industry and partly in agriculture; economy, which was discussed above (and the private credit used by private trade is partly credit from private industry). and even about 200 million rubles. attracts private credit capital, and also relies on that share of capitalist production in industry and partly in agriculture; economy, which was discussed above (and the private credit used by private trade is partly credit from private industry).

Here are some of the results that must be kept in mind when judging the activity of private capital in the field of private trade.

Capital and the social structure of private trade.

First of all, instead of mixing into the total mass of “private economy” and its capitalist and non‐capitalist share, it is necessary to separate separately private capitalist trade and separately those small manual and so‐called traders who are

not capitalists, but either representatives of a kind of “handicraft” trade, so to speak, or hired agents of big capital (a kind of ʺhome system of capitalist tradeʺ, which, however, takes place on the streets).

With regard to the general determination of the size of private funds in trade, we have three authoritative calculations in this area.

All three refer to the same period, namely, to the state of affairs for the 1924/25 economic year. According to these data, on October 1, 1925, we get such a picture.

According to the development of the State Planning Commission (comrade Strumilin), counting the own funds of private traders, counting the funds of private capital attracted by them from outside, and counting their net accumulation for 1924/25, it turns out as of October 1, 1925, a total of 546 million rubles .

According to the Peopleʹs Commissariat of Trade (development made under the direction of Comrade Dvolaytsky), the same amount is 656 million rubles. (The results of the calculations of comrade Dvolaytsky and comrade Strumilin are given in the said article by comrade Dvolaytsky in the collection ʺOn the Ways of Socialist Constructionʺ).

Finally, according to the materials of the Narkomfin (published in the journal Finance and National Economy of October 5, 1926, calculated by Comrade Kutler), it turns out 597 million rubles. By the way, this treatment by Comrade Kutler should not be confused with those exaggerated figures of the same P. Kutler, which were published a year before and were often referred to.

He explains in the article that the previous figures were the product of only less than half of the questionnaires. Now more

complete material has been obtained, which gives the results presented. Thus, we have three estimates: one is about 550 million rubles ‐ Gosplan, another ‐ about 600 million rubles ‐ Narkomfin and the third ‐ about 650 million rubles ‐ Narkomtorg. The fluctuation in estimates is generally small, by a maximum of 100 million rubles, and one could take an average figure of 600 million rubles.

Not, of course, because one can give one’s head for a cut‐off, that on October 1, 1925, there were exactly 600 million, and not 610 or 620, but simply because, given insufficient data, all these three calculations are equally plausible, and the results of all they differ so little from each other that if we take the average value, then the possible error will be relatively very small.

However, out of caution and in order to avoid disputes about exaggeration, we will take the smallest of all estimates, namely 550 million rubles (especially since the disagreements relate to a large extent to determining the amount of net accumulation for 1924/25 according to Kutler ‐ 100 million rubles, according to Dvolaytsky, 150 million rubles, and according to Strumilin, 114 million rubles; we take the smaller of these three values).

Considering the material of all these three calculations, it can be established that 550 million rubles. private funds available on October 1, 1925 in private trade consisted of such parts. First, private merchants with whom they operated in 1924/25 had about 300 million rubles of their own funds. Here we can recall that, according to the opposition, this amount should have amounted to 900 million rubles at that time. So it is three times exaggerated, as it turns out from the re‐collected and then developed data. Secondly, the net accumulation of private traders, which as a result of 1924/25 amounted to about 100 million rubles. Thirdly, attracted by private merchants from private funds, which were up to 150 million rubles. as of October 1, 1925. The amount of 550 million rubles. and its

constituent parts are the initial value, based on which it is necessary to determine the amount of private funds in trade at the present time (the end of the 1926/27 economic year). To do this, you need to know the amount of net accumulation. By pure accumulation, I mean the accumulation above and beyond what private traders have to spend on taxes, on other expenses of their trade, and on paying interest on borrowed funds.

The annual value of this net accumulation is determined differently by various sources, ranging from 32% for equity per year, as determined by the Peopleʹs Commissariat of Trade (more precisely, 31.9%; ; p. 21 in Planned Economy, No. 9, 1926). The rest of the definitions fluctuate between these values.

The definition of the Peopleʹs Commissariat seems to me more cautious. If we accept only 32%, then by October 1, 1927 we will have about 680 million rubles of own funds of private traders, including net accumulation, then about 200 million rubles of private funds attracted to private trade from the outside, and, moreover, , private funds in smuggling (as indicated in section two, chapter on smuggling) ‐ up to 20 million rubles. And only up to 900 million rubles. private funds, minus mutual settlements, is now, towards the end of 1926/27, in private trade.

These 900 million rubles are the entire sum of private funds circulating in private trade. We saw above that, in addition, the state finances it by about 350 million rubles. If we do not take into account the accumulation for the 1926/27 business year and the funds invested in smuggling, then in total private trade entered the current year 1926/27, operating with approximately one billion funds. Of these, about half accounted for their own funds (520 million rubles as of October 1, 1926) and about half (550 million rubles) for credit.

In particular, the state delivered to private traders almost exactly one third of all the funds circulating at their disposal as of October 1, 1926, and in this way ensured the possibility of a corresponding part of their turnover. The terms of commodity (and even more so advance) lending, as established by the development of the Peopleʹs Commissariat of Trade, despite their relative brevity, are such that they often provide an opportunity for private traders to almost completely conduct their operations; at the expense of state credit, commodity and monetary (article by A. Sokolsky, “Commodity lending to a private trader” in the aforementioned collection “(Narkomtorg,

p. 123; this includes, for example, about 50% of commodity credit to private traders from the Textile and Leather Syndicates).

It goes without saying that in such cases it will now be necessary to revise downward the terms of commodity crediting to private trade and the amounts of advance payments issued. In those cases where a survey of the Peopleʹs Commissariat of Trade reveals the activity of private trade exclusively or mainly at the expense of state commodity and monetary loans, and not on the basis of private funds, it is necessary to raise the question of replacing such ʺworkʺ with a direct state and cooperative organization (with the provision of these funds to the relevant Soviet authorities).

By the way, the materials developed by the Peopleʹs Commissariat of Trade show that even now, thanks to the practice of our trusts and syndicates, ʺthe advantage of cooperation in terms of lending terms is often completely lostʺ (p. 121 of the same collection), and ʺwith regard to the conditions of lending to individuals and cooperation, there is no necessary distinction between the release of sufficient and insufficient goods” (ibid.). Taking into account the speed of turnover, it turns out ʺthe opportunity for the private trader to

derive more benefit from commodity credit than from cooperationʺ (p. 123). Such results require, of course, the introduction of more stringent controls and more detailed guidelines 17 ).

1) As a model, I cite several examples of the practice of 1927 from the issue of Economic Life alone (dated June 9, 1927 ‐ senior comrade Krongauz ʺDistortion of trade in the wholesale link):

The Zinoviev State Plant Krasnaya Zvezda buys threshing leashes from the Industrial Union and from a private trader at the same time. The lots are the same (10 pieces each), the quality is the same, but the private trader gets a penny apiece more expensive.

The Nizhny Novgorod beer trust all the time prepared beer pitch for 24 rubles. per pood, and suddenly (deal No. 11541) begins to pay a private trader 40 rubles.

Carmine‐nakarat is available in Rostov from the state organization Khimtorg and is sold for 31 rubles. 50 k. per kilogram. This does not prevent, however, the Taganrog TsRK (ʺWorkersʹ Wingʺ) from buying goods in Moscow, always from a private company, and always at 55 rubles per kilogram.

The Nizhny Novgorod Communtrest, together with certificates of the absence of gas fittings and other goods in Moscow state bodies, submits for registration a deal for the purchase of these goods from a private Moscow company; but even with the most superficial analysis of the operation, it turns out that most of the purchased items are in Nizhny Novgorod Zagmetal.

The Krasnoye Sormovo plant, having quite similar offers from state and cooperative organizations, prefers to take a large batch of firewood (for 82 thousand rubles) from a private company at prices exceeding state and cooperative ones.

Since mid‐April, LSPO has been selling pickles to primary cooperatives at a price of 29 rubles. 75 k. per thousand on credit for 45

days, but the cooperative ʺVasileostrovetsʺ (despite the uniform quality of the goods) buys cucumbers from a private firm at 31 rubles per thousand, paying in cash.

There are also the most perfect curiosities.

“Wall paper trust (in Leningrad), receiving a cap factory from the former tenant of a private owner, acquires from the latter among the inventory: buckets, light bulbs, wall clocks, pocket watches, teapots, etc., and in total for 2465 rubles. 43 k., and the percentage of wear, even according to the tenantʹs specification, reaches 40‐75%.

We need to establish how much of the funds circulating in private trade can be attributed to its capitalist part. The only serious material on this issue is the development by the Peopleʹs Commissariat of Trade of about two thousand typical balance sheets collected according to a special program by instructors and statisticians of the Peopleʹs Commissariat of Trade for 1925.

All private trading enterprises for the corresponding calculation, I divide into three groups. The first group is wholesalers and semi‐wholesalers, which approximately corresponds to the fourth and fifth categories in terms of taxation. All of them together on October 1, 1926, there were 23 thousand people. The second group is about 155 thousand people. merchants of the third tax category (figures according to Comrade Strumilinʹs article, in No. 9 of Planned Economy, 1926, p. 9). These are those that) have their own shops ‐ not kiosks, but real shops. They usually also have hired employees in these stores, sometimes they are engaged in semi‐wholesale operations on the sly. Together, the first and second groups, almost 180 thousand people. Merchants are those who can be ranked among the big and middle commercial bourgeoisie 18 ).

“The Kazan Metal Trust is selling over 2,000 kilograms of copper pipes to two merchants for resale, and the resale is known in advance, because the deal clearly stipulates that the bills are issued by the

Zinoviev mestkhoz’s Smychka plant and are blanked by private buyers.”

If we do not count free patents (issued to disabled associations, etc., but counted as “private” by our statistics), then in total there are slightly less than 170 thousand valid private trade patents of the indicated categories. However, if we add to them private industrial patents of the corresponding categories (only about 10 thousand from the third category and above), then in total almost 180 thousand bourgeois commercial and industrial patents (from the third tax category and above) will turn out.

In the third group, I include the first and second tax categories. These are those who trade from kiosks (second category) and from their hands (first category), for example, from stalls, peddlers of newspapers, etc. As of October 1, 1926, there were about 450 thousand people. They cannot be considered capitalists; quite often they are unemployed, selling pies on the street, etc. until they find employment. In part, and not infrequently, they are simply peddlers hired by a large private entrepreneur, whom he forces to choose a patent. There is a complete similarity with the spray system, which is observed in the industry in the form of a ʺhome system of capitalist industry.ʺ And it is precisely the capitalist buyers of handicrafts, the organizers of the capitalist domestic industry, who resort most frequently to this ʺdispersal of tradeʺ. In Moscow, for example, one could observe at the end of May 1927 on the most diverse streets, the sale by manual peddlers of exactly the same wallets with embroidery “for good memory”. These purses are the product of the dispersed ʺdomestic systemʺ of capitalism, which are then sold through the dispersed trade organized by the same capitalist who organized their production.

Manual and kiosk trade are thus predominantly either the hired agents of the capitalists or the temporary occupation of the

unemployed and other poor people with negligible working capital.

Here, there is usually no question of the capitalist accumulation of the kiosk or manual traders themselves. With the exception of the fact that they are obliged to pay for the goods sold to the capitalists who hire or supply them, pedlars and kiosks, as special surveys show, have only a very modest living wage (usually lower than that of a factory worker) and to pay taxes.

Insofar as capitalist accumulation takes place in this minute trade, it proceeds in favor of those capitalists who hire or supply these smallest merchants.

The transfer of this accumulation to them is ensured by the very conditions of employment or supply. That is why, by the way, this layer of the smallest atomizers of goods, these 450 thousand people. are not at all passionate, adherents of capitalist trade.

Experience shows that they are often quite willing to cut ties with the capitalists supplying them and turn into agents of the state agencies as soon as the state agencies show an intention to start supplying them. On October 1, 1926, about 200,000 of these smallest peddlers and kiosks were in the countryside and about 250,000 people in the city (Strumilin, the same article ʺOn the fate of private capitalʺ, p. 11). In the vast majority of the villages (about three‐quarters as of October 1, 1926) there are still no cooperative shops or kiosks, and they will not spring up everywhere so quickly. To use 200,000 pedlars and kiosks to supply these villages, tearing them away from the private capitalist and actually turning them into controlled agents of government agencies, is a very worthwhile task. Yes, and out of 250 thousand. There are quite a few kiosks and peddlers in the cities who are concentrated precisely in those bazaars and markets that specially supply the peasants who come to the city for shopping.

In this sense, they, in terms of the circle of buyers, in essence may not be competitors of the urban workersʹ cooperative (if it at least decently supplies its permanent members so that they do not run away from it to the ʺkioskʺ market) And they can also be cut off from capitalist merchants and turned into agents of state agencies for the supply of the peasantry coming to the markets and bazaars (until the development of proper cooperative trade in the villages themselves).

The distribution of own capital and other (borrowed) funds circulating in private trade between large traders (fifth and fourth tax categories, mainly wholesale and semi‐ wholesale), medium (third tax category, shops) and small (second and first categories ‐ handbrakes and kiosks, not related to the number of capitalists) is given by us first on October 1, 1925, according to the above‐mentioned special survey, about two thousand typical balance sheets by the Peopleʹs Commissariat of Trade of the USSR (published on pages 124 135 of the collection “Private Trade of the USSR”, M., 1927, edition of vol. Zalkind). By extending the data of these balance sheets to all private trade, as of October 1, 1925, the Peopleʹs Commissariat of Trade receives the sum of the own capital of all private merchants in 1924/25, their accumulation for 1924/25, and the balance of borrowed funds attracted by them from private sources ‐ a total of 635 million rubles (p. 134 collections). We have taken this value above for the same number of 550 million rubles. But, firstly, the Peopleʹs Commissariat of Trade itself agrees to consider its absolute count (albeit slightly) exaggerated (p. 135), and secondly, we are primarily interested here in relative values (of the distribution of funds among the three groups of private merchants).

Merchantsʹ own funds, invested in trading enterprises in 1924/25, were distributed among the Peopleʹs Commissariat of Trade (p. 134 of the collection) in private trade as follows:

Major merchants	33%
Medium	50%
small	17%

It must be said that in terms of the amount of turnover at the same time (according to data for the second half of 1924/25), the private trade of the USSR was divided at that time (p. 18 of the collection of the Peopleʹs Commissariat of Trade) between the same groups of merchants in a slightly different way:

Major merchants	36%
Medium	44%
small	20 %

This comparison can serve as if an indication that part of the turnover of small traders is carried out at the expense of medium and large ones. As for the distribution of accumulation, according to the Peopleʹs Commissariat of Trade (p. 134), peddlers have no accumulation at all, among stalls it is so insignificant (about 3 rubles per month per trader) that it can be neglected (and even then it is actually transferred, as already indicated, to a larger owner supplying or organizing these kiosks). For the rest of private trade, according to the collection of the Peopleʹs Commissariat of Trade, for 1924/25 there is a net accumulation of 123 million rubles. (according to the same development of balance sheets, p. 134; we assumed an accumulation of 100 million rubles), and it is distributed almost equally between medium (51%) and large (49%) traders.

Based on all these percentages and on the basis of our accepted (minimum of all calculations) values of 300 million rubles. own funds of private trade in 1924/25 and 100 million rubles. of its net accumulation for 1924/25, we obtain, on October 1, 1925, the following distribution of this entire sum together:

Major merchants 150 million rubles Medium 200 million rubles

small 50 million rubles

In other words, during the year, as is natural in private trade, there was a certain relative concentration (concentration) of funds in large‐scale trade (37 1/2 % instead of the previous 33%). Over the next two years (in 1925/26 and 1926/27) this process of concentration of private trade funds in the hands of big merchants intensified still more. An illustration can be provided by the Gosplanʹs Control Figures (p. 374) on the growth, first, of the wholesale and, second, of the rest of the private intermediary turnover in 1926/27 compared to 1924/25. According to these data, the turnover of the private trade grew by eighty per cent in the course of the biennium, while the turnover of the rest of private trade grew by only thirty‐three per cent.

Continuing the same calculation for 1925/26 and for 1926/27 (as is known, during these years there was neither such a decrease in prices in private trade, nor such an increase in the severity of its taxation, which would lower the percentage of accumulation in it), we will obtain, as of October 1, 1927, the following approximate distribution of all own funds of private trade, including the accumulation of 30% for 1926/27:

Major merchants 300 million rubles Medium 300 million rubles

small 80 million rubles 680 million rubles

The increase in the funds of non‐capitalist small traders is due mainly to an increase in their number. In two years, from September 1924 to September 1926, their number increased

from 307 thousand people. up to 450 thousand people ‐ almost half (Strumilin, op. article, p. 9). The share of large merchants in all their own means of private trade increased even more, to 44%. The concentration of private commercial capital in the hands of this elite (the owner here now has an average of about 15,000 rubles of own funds in trade) has thus made quite significant progress over the past three years. On October 1, 1924, they owned 33%, three years later they own 44%. There is nothing surprising in this, if one recalls the above statement from the State Planning Commission on how much faster private wholesale trade has grown in recent years compared to the rest of private trade.

Thus, in the internal development of private trade, a trend can be established similar to that which is established in the section on industry for private industry. Namely, within private trade, the relative percentage of capital and turnovers that falls on the capitalist, especially on the large‐capitalist part of it, grows, and the percentage that falls on the share of non‐capitalist private economy decreases.

Looking ahead, we can immediately point out that the second result is the same. As the share of private industry as a whole recedes in the countryʹs total industrial gross output before the share of state industry, so the share of private trade as a whole in the countryʹs total commodity turnover recedes before the share of the state and cooperation.

In both areas of the economy, in industry and in trade, we have the same picture of how, under the conditions of NEP, capitalist sprouts appear within the framework of private economy, which on the whole is retreating before socialism. We shall discuss further in the section on the evolution of private capital how this emergence of new capitalist sprouts within private economy under Soviet conditions differs from the growth of capitalism in private economy under bourgeois dictatorship,

and what constitutes the precariousness and unviability of the basis for the development of these sprouts in our country.

We saw the distribution of 680 million rubles by groups. own funds (with accumulation) in the internal trade of private traders by the end of the 1926/27 financial year. Next come 20 million rubles engaged in smuggling, and 200 million rubles attracted into private trade in the form of a loan (balance) from some private owners. Smuggled capital without risk can be almost entirely included in the capitalist part of trade. It is absolutely clear that neither Moscow stalls nor street peddlers can at their own expense organize the smuggling of large quantities of knitted items, valuable manufactory of the highest grades, etc. from abroad. Distribution of the balance of funds attracted from other private owners (200 million rubles .), in the absence of any information, one has simply to accept proportional to the distribution among the groups of their own funds. More can be said about the distribution of state commodity and monetary credits (approximately 350 million rubles).

First, the industrial commodity credit (almost 200 million rubles, as stated above, including the cooperative credit) must be attributed wholly to the share of wholesalers and semi‐ wholesalers. Until now, trusts and syndicates have hardly traded directly with private retailers. And if, as an exception, they did, they did not provide him with any serious commodity credit. Events of this kind are still being developed for the future and suitable forms are being sought for them.

The same can be roughly said about the provision of advances to buyers‐contractors for the supply of agricultural raw materials for industry and for export, the provision of advances to private lumberjacks and construction contractors (in total, about 100 million rubles). This is obviously not about small retailers, but about business contractors, buyers, etc. For the

procurement of certain types of raw materials, relatively small private prasols are involved, but this ʺsmallnessʺ should be understood very relatively. If such a small prasol prepares at least a hundred heads of cattle for meat in a year, this is already at least 10 thousand rubles. Not a single small trader in our sense of the word (handbraker and kiosk) even dreams about the corresponding advances (or commodity credit) from government agencies.

Finally, the last part of public funds is about 50 million rubles. money credit is by no means petty, as shown in the second section of the results of surveys of mutual credit societies and certificates on lending to individuals by Soviet credit institutions. Thus, if all borrowed funds (both Soviet and from private individuals) are distributed between two groups of private traders ‐ non‐capitalist (450 thousand people) and capitalist (almost 180 thousand people), then the former will have a little more than 20 million. rub., and in the second up to

530 million rubles. Together with its own funds (and accumulation for 1926/27), including smuggling, the total is at the disposal of private trade in round numbers:

Non‐capitalist part 100 million rubles capitalist 1150 million rubles

Thus, at the present time capital is tied up in bourgeois trade in excess of a billion chervonny rubles, only a slightly larger half of which is the property of the merchants themselves. Approximately 600 million rubles. including is in circulation for approximately 23 thousand people. large (in our scale) merchant capitalists, on average about 25 thousand rubles. to the merchant. With such funds, with a quick turnover, a rather significant turnover can be made in a year. Especially since (as we will see: in the sixth section) they also own most of the private credit capital in the country in general.

In relation to all the countryʹs resources employed in trade, the capital circulating in bourgeois trade is now a rather modest amount, not even reaching 20%. This means that its share in all the countryʹs trading assets has decreased quite significantly over the past two years.

For, according to the calculation of comrade Dvoilaitsky (according to the data of the Peopleʹs Commissariat of Trade), his share on October 1, 1925 was much higher ‐ 23% (p. 136 of the collection ʺOn the Ways of Socialist Constructionʺ, article comrade Dvoilaitsky ʺPrivate capital in tradeʺ) .

At the same time, the remaining (Soviet) funds linked to trade amounted then to 4,024 million rubles. rubles, including the state accounted for 1,938 million rubles. and for cooperation 2,086 million rubles, of which, by the way, it had its own at that time, only 96 million rubles. (same article, p. 135) Of the total cooperative turnover, by the way, consumer cooperatives account for about 70%, agricultural cooperatives about 20%, and trade cooperatives about 10%.

The decrease in the share of capital circulating in bourgeois trade in all the countryʹs funds linked to trade19 is explained by large additional investments of funds in these years in state and especially in cooperative trade.

19) The above calculations do not take into account funds linked to intra‐village inter‐peasant turnover. If this is joined by the process of the gradual release by the state of its large funds, now provided on credit to bourgeois trade (about 350 million rubles), and the transfer of these funds to the co‐operatives to replace the bourgeois merchant, then the role of bourgeois commercial capital in commodity circulation countries will become much more modest.

Meanwhile, conditions are already being created for such a gradual withdrawal with transfer to cooperative bodies. The main condition is such an expansion of the cooperative network

of procurement (agricultural and trade cooperation) and commodity distribution (consumer and housing cooperation for building materials and firewood) and such an accumulation of experience that the cooperation is able to organizationally cope with the task of replacing the corresponding part of capitalist trade, having received for this purpose, funds from the state provided in this part to the capitalist merchants.

Just the current year 1927 is in this respect a good preparation for the cooperation, because it is devoted to a comprehensive verification of its commodity distribution network, to simplify, reduce the cost and increase the expediency of its construction.

At the same time, the cooperatives are now being given the task of developing those procurements in which they have little participated (meat, vegetables), and measures are being taken and prepared in general for broader support for agricultural and trade cooperatives and for developing their network.

All this will make it easier for the state to gradually transfer its large credit funds, now invested in private trade, into co‐ operatives, and thus abolish the corresponding dependence on the exploiters of the working population and the working population in general.

Role in the industrial and agricultural market. Wholesale and retail. City and village.

The role of private and in particular capitalist trade can be calculated in two ways. Either by the sum of turnovers, i.e., by the sum of all sales and purchases in the country, with the selection of those transactions that fall on the share of private traders, or by the mass of goods, i.e., by that part of the items sold in the country that are sold, which went through a private sale. With us, the first method of counting is almost exclusively common, because it is easier. For him, there is ready‐made

material in the form of data from the Narkomfin on taxable (according to the trade tax ‐ “equalization fee”) trade turnover. But these data, by the very nature of public and private turnover, create a significant distortion of the picture of what part of the goods goes through private trade.

Private trade, as is well known, deals mainly with consumer goods (industrial and food‐compare above in the section on industry with the fact that private industry also produces mainly consumer goods). Meanwhile, in state trade, trade in the means and materials of production plays an extremely significant role, which is carried out only by trusts and syndicates; with other trusts and syndicates. In the section on industry, it is stated that less than half of the total gross output of state industry is accounted for by means of consumption.

Meanwhile, due to our organizational system, materials and means of production must be sold several times by one government agency to another government agency in order to go into business. For example, before the revolution, the large cotton factory of Konovalov herself bought cotton for herself in Turkestan or Transcaucasia from small buyers, and it was over. Now, however, local trades, cotton growers, and other government agencies buy cotton from the same small buyers and directly from the peasants (dehkans). Then Glavkhlopkom buys cotton from these government agencies. Then the All‐ Union Textile Syndicate buys this cotton from Glavkhlopkom. Then some cotton trust buys this cotton from the Textilesyndicate. And then the trust passes this cotton to one of its factories for processing. Turnovers within a trust are not included in tax statistics. But all other repeated sales between government agencies of the same cotton on the way from Central Asia to the factory are each time re‐recorded (and taxed). More repeat sales as the iron ore turns into a plow, etc. The same story happens with coal and other means and

materials of production. In state industry, therefore, there is a series of repeated wholesale sales of the same object before it even begins its journey in the transformed form of an article finally ready for consumption from the factory to the consumer.

Meanwhile, private industry is almost never engaged in the manufacture of the means of production itself. She buys the materials she needs ready‐made from government agencies (metal, etc.) or from peasants, etc. (raw materials for the food, leather, and other industries). She knows, of course, like the state industry, several links in the promotion of finished products from the factory to the consumer. And then, due to the nature of its production, this path turns out to be very often with fewer links than with the state factory. A state factory delivers a product to a trust, which sells to a syndicate, which sells to the Central Union, which sells to a regional union, which sells to a district (or provincial) union, which sells to a district, and which sells to a primary cooperative. And the primary cooperative sells to the consumer.

Thus, the tax statistics of the Narkomfin cannot give an idea of what part of the goods goes through private trade, because they contain incomparable terms. Cotton is counted several times, because under our organization, state agencies have to sell it to each other several times in order to deliver it to the factory. And besides, another trust sometimes sells yarn to another, and only another trust begins to make and sell cloth.

A private factory directly starts with the purchase of yarn and the sale of dressed fabric. Thus, the tax statistics of the Narkomfin, by their very nature, should exaggerate and exaggerate the share that falls to the share of the state and the cooperatives.

For she considers not goods, but turnovers. And if, for example, tax statistics show (according to Gosplanʹs Control Figures) that

in 1925/26 private trade accounted for 9.4% of wholesale trade, this does not at all mean that only 9.4% went through private wholesale. % of goods.

It only means that if in the state sector cotton, metal, etc., are counted several times until they reach the factory, which, by its very nature, cannot in any way be in the private share, then the share of private trade in the sum of wholesale turnover will be 9.4%.

Obviously, it would be very easy for us, if for some reason necessary, to reduce this share statistically to 2% or to 1%. One has only to order all the syndicates and trusts to, once again, sell cotton, metal, ore, etc., to each other through the exchange. But it is obvious that we have no need to engage in such statistical tricks for the greatest shame of private capital.

Therefore, we must turn to another method, to find out what part of the goods passes through private trade and what part of the goods reaches their final destination without the intermediary participation of private traders.

In order to determine the part of the countryʹs industrial output passing through private trade, it is necessary to consider wholesale and retail trade separately, for a whole series of products (for example, the part of handicraft products sold directly by handicraftsmen) is sold to the consumer without going through the capitalist wholesale and semi‐wholesale trade.

The following parts of the countryʹs industrial output pass through capitalist wholesale and semi‐wholesale trade:

1) the products of capitalist industry, including its domestic system;

2) part of the output of the handicraft labor industry, bought up by capitalist buyers;

3) part of the production of the state industry, legally sold to private wholesale and semi‐wholesale;

4) a part of state products illegally bought up by private traders (through front dealers in state and cooperative retail stores).

The output of capitalist industry (including pseudo‐operatives and the domestic system) in 1925/26, as we have seen, was about 11.7%. Some of these products are sold by the capitalists to state agencies and co‐operatives, so that the consumer sometimes receives these products not from private shops, but in any case, they were originally sold to state agencies by the capitalists, so that they passed through capitalist trade in their entirety.

There is quite a lot of information about what share of all handicraft products (including those organized in the

ʺdomestic system of capitalist industryʺ) is sold through private buyers.

As of April 1, 1926, in the USSR, of all handicraftsmen, only 9%, i.e., 280 thousand people, participated in cooperatives that are part of the corporation system. In addition, another 11% participated in ʺwildʺ cooperatives that were not part of this system, that is, almost entirely in pseudo‐cooperatives.

Finally, 80% of all handicraftsmen did not belong to any cooperatives at all (quoted from an article by Comrade Tsylko,

p. 75 of the journal On the Agrarian Front, 1927).

But even the handicraftsmen who participate in the cooperatives that are part of the system still find themselves subject to a significant degree of dependence on the private buyer. According to the All‐Russian Union of Commercial Handicrafts‐Vsekopromsoyuz, published in the journal Planned Economy, No. 2, 1927, p. 28, the cooperatives that are part of the cooperation system sell 30% of their products

through a private trader. This is for the RSFSR. In Ukraine, they sell even 40% of their products through a private trader. These are cooperatives that are part of the cooperative system. As for the cooperatives that are not part of the cooperative system, they sell to an even greater extent, almost entirely.

The role of a private trader in the sale of industrial products of the entire network of trade cooperation of the RSFSR is as a result: in the woodworking industry 65%, in the leather industry 38%, etc. (Tsylko, p. 75).

Finally, as regards handicrafts that are not members of any cooperatives ‐ and we have 80% of such handicraftsmen ‐ then, according to all available data, they sell their products in the vast majority through a private buyer. For example, “in the sale of felted shoes, the role of a private trader in Kalyazinsky, Ivanovo‐Voznesensky and Vyatka districts is determined in 80% of all blanks, in the Ural region ‐ 85%”, etc., and in the end, even for Vsekompromsoyuz, for the handicraft industry as a whole (including cooperation) ʺthe role of the private trader in the sale of handicrafts is determined by no less than 60‐70% even in the most cooperative regionsʺ (Tsylko, p. 74).

Therefore, on average, no less than 75% should be considered. But we already know that of all handicraft production, about 25% is organized into the ʺdomestic system of capitalist industry.ʺ Subtracting this, we get that of the rest, that is, of handicraft labor production, no less than half is bought up by capitalist buyers (more precisely, about two‐thirds). In the section on industry, we saw that out of all the industrial output of the USSR, private labour; production accounts for about 10%. Consequently, the part of labor private industrial production bought up for resale by capitalist buyers accounts for at least 6% of the entire industrial output of the USSR.

The portion of the output of state industry legally sold by syndicates, trusts, auctions, etc. to private wholesalers and semi‐wholesalers is comparatively small. For 1925/26, according to the reporting data of the Peopleʹs Commissariat of Trade, comrade Dvolaitsky defines it as follows: to the broad market” (p. 126 of the collection “On the Ways of Social Construction”). All state production, as is known, in 1925/26 accounted for about 80% of the industrial output of the USSR, and about half of the state production went to the broad market (46% according to Gosplanʹs Control Figures). This means that 15% of this half, transferred to private traders, make up about 6% of the entire industrial output of the USSR.

Finally, that part of the products of the state industry, which fell into private trade illegally (through front dealers in state retail and cooperatives), is determined for 1925/26 by the Peopleʹs Commissariat of Trade in 20% of all products of the state industry entering the broad market (the same article by Comrade Dvoilaitsky , p. 127).

This definition is not arbitrary, but was made by the Peopleʹs Commissariat of Trade on the basis of data on working and other budgets and on the sale of state products in private retail. It is easy to calculate that 20% of the products of state industry entering the broad market constitutes about 8% of the entire industrial output of the USSR. In the second section (the chapter on repurchasing), we have already come to the conclusion that more than half of this illegal buying through hired nominees from Soviet retail is organized precisely by large merchants.

Consequently, in this way, capitalist trade receives up to 5% of the industrial output of the USSR (and then resells it to other cities, and partly to handicraftsmen for processing, for example, for making linen and dresses, and to shops in the same city).

In total, therefore, no less than a quarter of the total commercial industrial output of the USSR (more precisely, about 28% in 1925/26) passes through the capitalist wholesale and semi‐ wholesale trade. By ʺsemi‐wholesaleʺ I mean the trade of such private wholesalers who are simultaneously involved in certain limits (sometimes for cover) and retail. It should also be noted that if at least a quarter of the entire mass of industrial goods passes through the capitalist wholesaler‐buyer, then of industrial goods for the broad market an even greater proportion. For there are a number of manufactured goods in which the capitalists in the USSR do not and cannot trade at all—for example, steam locomotives, rails, rifles, looms, and many other things in the field of means and materials of production and special supplies (especially in wholesale trade). Of all the 28% above, items for the general market (means for personal consumption and household and small households) should account for about three‐quarters (if we are guided by the percentage of what means of consumption, according to the State Planning Committee, in all private industrial production). And since about half of the entire industrial output of the country accounts for broad market items, it means that up to 40% of them went through the capitalist wholesale and semi‐ wholesale in 1925/26.

From this it is clear that for the rise in the cost of living and for the reduction of real wages such a large actual participation of the capitalist wholesaler in the sale of those industrial goods, with the purchase of which only the working citizen directly deals, is of the greatest importance.

For no worker or peasant buys for himself personally or for the members of his family such goods as a steam locomotive, rails, rifles, a loom, etc., therefore, the circumstance that steam locomotives or weaving looms imported from abroad pass 100% only through state trade. On the contrary, it is very

tangibly reflected in the fact that up to 40% of those industrial goods that are the subject of purchases of the working, office, and peasant population and of all the townsfolk in general pass through the hands of large private traders. For it has been proved with perfect irrefutability that it is the private wholesaler who is the instigator of exorbitant price inflation.

The wholesaler then supplies private retailers with the main part of the industrial goods that they trade in, and skims the cream off them too: he puts in his pocket the main part of the cape that has increased since 1923/24, which private retailers make, despite the fact that The selling prices of production bodies (trusts, factories, etc.) have fallen since 1923/24. This reduction does not generally reach private retailers; it mostly remains in the pocket of the wholesaler.

This makes clear the practical importance of the currently planned measures to strengthen the replacement of the capitalist wholesaler by the activities of government agencies and cooperatives. The share of the countryʹs industrial output, which private commercial capital receives by participating in the legal wholesale trade in state industry products, is insignificant, only about 6%. But with the help of the totality of all sources of his supply, he passes through his hands much more ‐ up to 40% of all industrial goods that generally enter the broad market (that is, minus the production supply of state industry, minus transport, and military equipment, minus foreign trade industrial turnover, etc.). It matters so much which fully explains the direction of the stateʹs trade policy in the direction of strengthening the replacement of private wholesale capital by government agencies and cooperation, while with private retail (while continuing, of course, the general course towards its gradual replacement) the issue is not so acute. On the contrary, the task is set of separating it from the influence of private wholesale capital and using it as an

additional commodity distribution network to the extent that cooperation is not yet able to cover the entire trade turnover and to which private retail can be subjected to price and profit restrictions.

Of course, if the actual participation of private wholesalers in the distribution of industrial goods were reduced to only a few percent, then its costly practice would almost lose its significance and the dependence of the broad market on it would almost disappear. Now, however, we emphasize the importance of the struggle for its replacement precisely because it still plays a very prominent role in supplying the broad market (i.e., the population), and the wholesaler is the most parasitic of all private traders, i.e., increases the cost of goods without reasonable proportionality. with their promotional services.

This is the actual participation of a private wholesaler in the distribution of industrial products of the USSR for 28% of its mass, and for a wide market, even for 40% of all industrial goods, when assessing the share of private wholesale in the entire wholesale turnover, it turns into only 9.4% (for the same 1925/26 ‐ according to the ʺControl figuresʺ of the State Planning Commission). As has already been pointed out, there is no contradiction in these different calculations, there are only two different forms of approach to the same fact. For tax purposes, the sum of all sales (turnover) is important, at least including some goods in the wholesale trade, which were necessarily sold several times. And for socio‐economic purposes, it is important to establish what part of the goods pass through the capitalist wholesale, regardless of how many times this or that product will be resold from hand to hand in the wholesale trade.

As to what part of industrial products goes through private retail, from the figure for private wholesale (28%) one must

subtract that part of capitalist production which is sold wholesale by the capitalists to government agencies (hardly more than 2% or 3%), and add that part handicraft production, which is sold by the handicraftsmen themselves (out of the 5% that they have left after being bought by the capitalists, this will be about 4%, because about 1% goes through government agencies and cooperation), and then add the part that is illegally bought up in state retail by themselves private retailers (about 3%). Thus, about a third of the entire commercial industrial output of the USSR passes through private retail (including, as indicated, what the handicraftsmen themselves sell directly to customers and consumers).

If we take only industrial products for the general market, then it is easy to deduce from the given data that at least half‐50% of industrial products for the general market passed through private retail in 1925/26. The value obtained (50%) does not differ much from other estimates, if we recall that other estimates did not take into account the production of pseudo‐ cooperatives, etc. Thus, according to the calculation of the Supreme Council of National Economy, for 1925/26 this value is 42%, according to Norkomtorg ‐ 43%, according to Gosplan ‐ 43.3%.

This large figure further emphasizes the influence of the private owner on the general level of prices, especially in the countryside. For in the countryside up to two‐thirds of all manufactured goods pass through the private trader, while in the city only one‐third.

Of course, we have in mind all industrial products (both private factories and handicrafts, etc.), and not only products of state industry. If only the products of state industry are taken into account, as is often done in our country, then the result would be that even in the countryside a large part of the industrial

output is already carried out through cooperatives and state agencies.

But such a ʺdistractionʺ from handicraft and privately manufactured products is just as wrong as the widespread methods of measuring the level of prices by selecting only a few goods from among state products, moreover, of an almost standardized type, most amenable to price regulation, such as salt, kerosene, matches, etc. (See the list of eight commodities by which the price level is usually determined. Comrade A. Lvovʹs article in No. 2 ʺOn the Agrarian Frontʺ for 1927).

This approach is wrong. There are some other things to take into account as well. In particular, for the village, as Comrade Lvov points out in the same place, sunflower oil, and herring; in the northern part of the country, and flour, which is brought there in part to the village.

On the right bank of Ukraine, a private trader imports 30% of all fish, and even half of the fish imported by government agencies is sold through a private trader (from a review of the USSR Peopleʹs Commissariat of Trade for October‐December 1926).

And the price of fish (herring) is not included in the calculation of the price level. There are a number of such examples, and not taking them into account distorts the idea of the share of the private trader in rural trade in industrial goods and of his role in the formation of the price level.

To assess the role of private trade in the marketing of agricultural products, it must be borne in mind that in 1925/26 all marketable agricultural products (excluding forests) amounted to only 3,640 million pre‐war rubles, according to the

ʺControl Figuresʺ of the State Planning Commission ( 342; to convert to red at producer prices, according to the State Planning Commission, this value must be multiplied by 1.4).

Checking these data at the end of the reporting year gave a slightly higher figure, since the intra‐peasant turnover turned out to be underestimated (comrade Gromanʹs reporting article in Economic Life, April 2, 1927).

By intra‐peasant turnover we mean the sale of agricultural products by some peasants to other peasants (for example, the poor usually buy bread for half a year, earning money for this on the side; rural handicraftsmen, who are only partly engaged in agriculture, do the same, etc.).

These intra‐peasant sales, according to the reporting data of the State Planning Commission, accounted for 1,882 million pre‐ war rubles (the same article by Comrade Groman), and the rest was sold from the countryside to the city. This reported value of sales from the countryside to the city, determined by the State Planning Commission, almost exactly coincides with the value calculated for these agricultural procurements for 1925/26 by the USSR Peopleʹs Commissariat of Trade (in December 1926

- see the collection ʺOn the Ways of Socialist Constructionʺ, p. 130 ).

According to the Peopleʹs Commissariat of Trade, it turns out for such sales outside the agricultural population only 2,725 million rubles. red, which, when translated according to the same index (1.4), gives about 1900 million rubles. pre‐war.

Thus, of all the agricultural products sold by the peasants in 1925‐26, only about half were exported from the countryside to the towns. Of this half, according to the calculations of our official bodies, there were approximately one third each:

1) for the products of field growing, meadow growing, horticulture and horticulture together, except for raw materials for industry (moreover, for horticulture and horticulture together, only one sixth of this third; potatoes are classified as field growing);

2) for livestock and fisheries products, except for raw materials for industry (in particular, for fisheries ‐ less than one sixth of this third);

3) for agricultural raw materials for industry (oil seeds, flax, hemp, cotton, tobacco, shag, leather, sugar beets, wool, bristles, furs, chicory, etc.).

If we take what leaves the village, that is, that half of the agricultural marketable products that is alienated outside the village to the city, then, according to the calculations of the Peopleʹs Commissariat of Trade, quite detailed and quite plausible, it was necessary to buy up wholesalers ‐ by capitalists 25%, for sale directly by labor elements, who bring their products to the city to bazaars, etc., ‐15%, and for the procurement of state and co‐operative bodies ‐60% (collection

ʺOn the Waysʺ pp. 128‐131, calculation for 1925/26).

It turns out at first glance, as if not so bad, because of all that goes from the countryside to the city, from its agricultural products, alienated for the city and for export, only 25% passes through capitalist trade.

At first glance, this seems to contradict the well‐known phenomenon that the trade in meat, vegetables and many other food products in our cities is predominantly in the hands of private traders. This seeming contradiction will become clear if we exclude from the total share of agricultural products leaving the countryside that part which does not enter the broad market, i.e., if we exclude raw materials for industry, procurement for export and procurement for the army.

If these three things are excluded, as they do not enter the market for purchase by the population, but take the rest, i.e., what is bought and consumed in the cities and in the factory districts by the population, then a completely different result will be obtained. Of the part of agricultural production that

goes to the population of urban settlements, the share of private trade is no longer 25, but seventy‐five percent, while the share of state and cooperative trade together is only 25%.

This means that out of all marketable agricultural products leaving the countryside, state and cooperative bodies procure 60 percent. But since the main part of their procurement goes for export, for industrial raw materials and for the army, the share of state and cooperative bodies in the agricultural products consumed by the urban population is only 25%, and 75% goes through private trade.

Including more than 45% goes first through the capitalist wholesale and then goes to private retail, and almost 30% goes directly through private retail, that is, it is sold at the market by visiting peasants, thrush women, etc., who bring their products on carts and selling them to a large extent directly to retailers, bypassing large wholesalers, or directly to the consumer population right there on the market.

Thus, in the urban consumer market for agricultural products, we have a situation in which at least 75% of the food of agricultural origin purchased by the population is bought by residents from private traders. It is clear that in this area private prices, and not state and cooperative prices, are also decisive for the level of prices under such conditions.

Hence the general statements of our newspapers that the population hardly feels the drop in prices for foodstuffs produced by the co‐operatives. For such a ʺfeelingʺ it is necessary, first of all, to increase the share of cooperation in the procurement and sale of meat, butter, eggs, potatoes, vegetables, fruits, etc. This is one of the main tasks in the field of internal trade now. Successes in resolving it will not only increase and strengthen the real significance of money wages,

but will also greatly facilitate the further intensification of peasant agriculture and the increase in its labor intensity.

For the replacement of the private buyer by cooperatives means not only a reduction in price for the urban consumer, but also an increase in the price received by the peasant in comparison with the price he received from the capitalist (both due to the abolition of the capitalistʹs super‐profit).

Meanwhile, just all these products are among those that increase the intensity of the economy, require more hands, make it possible to get by with a smaller area and reduce the possibility of agrarian overpopulation and the expulsion of the unemployed to the cities.

If we take together trade in industrial and agricultural products on a wide market (that is, without a production supply for industry, without exports, without supplying the army, without transport equipment, etc.), then it turns out that in the cities, counting the peasant import In general, the population receives about 50% of all goods (a third of industrial and three‐ quarters of agricultural) through private retail.

And in the countryside, if we count the internal peasant turnover, this figure will be more than 80%, and if we do not count the sales of agricultural products by peasants to peasants, it will still be more than half of all goods sold.

This determines the role of private retail in setting our price level, and consequently the exchange rate of the chervonets, and the real value of nominal wages, etc. Above, we have already shown in what part private wholesale capital stands behind and above private retail. , which dictates the price level. But even in that part in which the private retailer acts independently, without the preliminary leading intermediary participation of private wholesale trading capital—and this

part is not so insignificant—the retailer also inflates prices no worse than the wholesaler.

Therefore, as the Council of Labor and Defense correctly reaffirmed in May 1927, the main directive for reducing prices remains the desire to replace cooperatives and private retailers. As long as this is not sufficiently possible, it is necessary, as a palliative, at least to tear off the corresponding part of this retail trade from subordination to the wholesale capitalists and to subordinate it to the regulating influence of the state that limits prices.

The rising cost of private trade. Economic and social significance of the problem of retail prices.

In March 1926, in a relatively narrow circle, I read a report on the topic indicated in the title. A few days later I received a letter (later published in the journal On the Agrarian Front) from Comrade F. E. Dzerzhinsky. In this letter, Comrade Dzerzhinsky, among other things, writes:

“... With your main position that high retail prices for industrial products are the main link in our difficulties, I fully agree and believe that overcoming all difficulties (simultaneously studying them in the process of struggle) can be most successfully by grasping precisely this link, t i.e., against the level of retail prices... I think we must mercilessly expose private capital in the way you are doing it—at the same time seek and show the way for subordinating this private capital to us, establishing the area of work allotted to it (because it is not always necessary to let it go) and determining the size of its accumulation. At the same time, we must develop tremendous work to strengthen cooperation as the future gravedigger of private capital. After all, the strength of private capital stems from the weakness of cooperation... Without good and cheap

cooperation, a private trader will beat us, and we will not get out of our economic difficulties...”

Comrade Dzerzhinsky in these lines excellently formulated the main idea: the question of retail trade is a question not only about this retail trade, but also about ʺthe main link in all our difficulties.ʺ This statement seemed to many then something paradoxical, strange, exaggerating. The most thoughtful of the major practitioners of our economic life, Comrade Dzerzhinsky, as he writes, “fully agrees” and came to the same basic conclusion that “all difficulties can be overcome most successfully by grasping this particular link,” which I also came to on the basis of a general socio‐political analysis of the difficulties of our economic growth and ways to overcome them.

The task of fighting for the reduction of retail prices has been set by our Party absolutely indisputably. But far from everyone fully assimilates the socio‐political meaning and significance of it for the entire economy of the country, which actually take place. The circle of thoughts on this subject, into which my statement introduces, attempts to pose the question of retail trade in the countryside not as a narrow economic and technical task, but as a ʺsocial relationʺ. How right or wrong in all parts is another matter. But only the posing of the questions of Soviet economic reality as concrete questions of the class struggle can lead us forward in understanding this reality, and not in simply navigating the sea of light‐weight chatter, which often replaces the search for the social roots of phenomena.

As long as there is no social unity of all economic life, since it is not unified, but there is the existence and struggle of different classes (the proletariat organized into the state; the bourgeoisie, predominantly merchants; various groups of the peasantry and private labor industry), then all sorts of difficulties in our economic development can be understood only if we reduce

them to their social roots. If, however, we restrict ourselves to only counting arithmetical errors in our plan—I am not saying that this is insignificant, this must also be counted, taken into account and weighed—but if we do not realize what exactly is hidden behind this, what is going on , then we will face the danger of falling into planned fetishism.

Just as in capitalist commodity fetishism the relations between things obscured the social relations between people, so in our society this kind of ʺplannedʺ fetishism can obscure the notions of the struggling social forces in our country.

Thus, it would not have made it possible to outline those social paths correctly and firmly, those social knots on which the attention of the economic proletariat should be concentrated. In no way am I speaking out against strengthening the planning principle in our economy in general.

Throughout the course of our planning organization and the strengthening of the idea of a planned principle in our economy, I have always been on the side of strengthening and developing this planned principle.

Now I only want to point out that if the enthusiasm for planning began to turn into oblivion of those social relations that exist in life, i.e., if the explanations of economic difficulties began to be reduced only to the establishment of “miscalculations” in the sphere of the plan, then this would be the transfer to our conditions, to the new conditions of NEP, of such explanations, which—and even then only in part—were admissible under the conditions of war communism, but now would mean an attempt to hide from the social content of life behind mere arithmetical errors.

If we approach the social explanation of the economic difficulties that manifested themselves in 1925/26, then, it seems to me, we should pay special attention to two things.

More attention must be paid to these things than is sometimes done in the analysis of our economic difficulties.

These two things are contained in the well‐known fact that we, a Soviet state with a proletarian dictatorship, live in such conditions when, on the one hand, there are other bourgeois states outside of us with a very large economic role of the foreign bourgeoisie, and on the other hand, inside In our state, with the existence of power and the dictatorship of the proletariat, the economic role of the bourgeoisie, which is still quite significant, has not yet disappeared.

These two circumstances—the existence next to us, on the one hand of the independent and not subordinate to us economic activity of foreign bourgeois states, and, on the other hand, of the economic activity of the bourgeoisie inside the USSR—these two circumstances play (and cannot but play) a very important role in explaining the slowdown in the rate of our economic growth in comparison with the expectations that took place before the start of the 1925/26 financial year.

Here, first of all, we must dwell, at least briefly, on the foreign bourgeoisie.

We have a fairly widespread opinion that, since Europe is in a state of economic decline, the role of the European states, as a possible market for the consumption of our goods and as a possible market for supplying us with foreign capital, is, firstly, not very great and, secondly, tends to decrease more and more, because in the general world economy the role of Europe among the bourgeois countries is increasingly falling, the percentage of its production in world production is decreasing, and instead the role and size of production of the United States of North America is increasing more and more.

I think this coverage is one‐sided and therefore incorrect. The World Economy Sector of the State Planning Committee of the

USSR, at my request, made a comparison of the data available for all the countries of the world that maintain any kind of statistics, or at least some semblance of statistics, for a number of basic sectors of the economy. I did it not according to pre‐ war, wartime and first years after the war data, but according to data, firstly, relatively fresh (for 1924 and 1925), and secondly, embracing not some randomly snatched, separate three‐four‐five states, and about fifty states of the globe.

If wee looks closely at these data, it will turn out that the widespread idea of the ever‐accelerating decline in the economic importance of Europe is a relic of the impressions that we had during the imperialist war and in the first years after it, when, indeed, the European economy, extremely disordered, bloodless, deprived of millions of workers, has fallen very significantly.

And its place, as a percentage of world values, was occupied primarily by the United States of North America. But it turns out that after tens of millions of people who were under arms before 1919 and partly in 1919 were demobilized and returned to work, it turns out that after that the European economy began to gradually catch up with the pre‐war ratios. Catch up in the sense that the size of European production, participation in foreign trade, etc., is already approaching more and more the percentage that Europe accounted for before the war.

Of course, I do not set myself the task of assuring that the United States is a state that is not worth paying attention to, and that Their position has not strengthened compared to the pre‐ war. I want only to point out here the second side of the matter, namely, that in the last five years Europe has been gradually regaining its former economic positions of the former percentage in world production, of the former percentage in world foreign trade.

If before the war European foreign trade accounted for 630/000, now, according to the data of the last two years, on average, Europe accounts for more than half of world imports and exports. If we take the entire world trade turnover as a whole, it will be about 55 r/o, i.e. Europe “has already moved very close to the 63 r/o it had before the war.

In particular, for example, Japan is experiencing certain difficulties precisely because European industry has to a large extent won back its old markets in Asia, etc., where it previously dominated, and where Japan strengthened itself during the World War.

In 1920, the United States accounted for as much as 38% of world exports and 35% of world imports, and in 1924 only 23% of exports and 17% of imports.

Of course, when I talk about the significance of the current state of the European economy, that the European economy is gradually approaching the pre‐war level, that if we take Europe as a whole, then gradually it restores those percentages in the total world production and trade that belonged to it before. “This should by no means be understood in the sense that, therefore, all hopes for the expectation of a socialist revolution in Europe are falling away.

On the contrary, the economic growth which, by and large, has been observed there in recent years, means at the same time the growth of the contradictions that are inherent in capitalism.

For it is known that as capitalist economy unfolds, develops, and grows, it also leads to the growth of the contradictions that are contained in it. The atom contains the general dialectical process of its development (complicated by the ʺspecialʺ circumstances of the post‐war crisis of capitalism).

And, consequently, the possibility of the onset of the socialist revolution is due to the fact that a noticeable number of factories and factories have still been built in Europe; because France is now a much more industrial country than it was before the World War;

because Italy is a more industrial country than it was before the war; the fact that in recent years Germany has managed to cover itself with a network of power plants that did not exist before the war;

because England is also building huge electrical installations— from all this, the possibility of a socialist revolution in Europe not only has not diminished, but has even increased, since this leads both to an aggravation, a further deepening of those contradictions that are inherent in the capitalist system, and to the accumulation the sheer number of the proletariat, to the dissolution of those strata that stand between the proletariat and the bourgeoisie. We cannot and must not take the stand that the technical progress of the bourgeois states is their insurance against the socialist revolution.

This would be a completely misunderstanding of Marxʹs well‐ known remark that no society perishes without exhausting itself to the end.

If we understood this remark in this way and asserted that for the triumph of the socialist revolution it is absolutely necessary that the number of factories in bourgeois countries should decrease and not increase, that new ones should no longer be built, that the productive forces should not develop at all, then this would be wrong.

The development of the productive forces in America, Europe, Asia, and other places, generally speaking, far from being an obstacle to the social revolution, is a favorable condition for its

maturation, for it more and more strengthens and sharpens the contradictions inherent in the capitalist system.

All these discussions about the current economic role of Europe and that its importance in the world economy has not declined in recent years, but, on the contrary, is beginning to gradually recover, are necessary in order to emphasize the importance of the European bourgeois states, primarily as a growing import market for goods from the USSR and as a market for supplying us with capital.

After all, we are not setting the task of attracting foreign capital to the Soviet Republic for our further economic development, for our industrial re‐equipment, for the construction of new factories and plants, not at all as a task of doing all this only or mainly by concession.

It is known from the decisions of party congresses and Soviet bodies that we regard concessions as a useful and necessary means, but only as an auxiliary means.

The main way to recreate Soviet industry does not go through concessions. Now our industry is not in short supply, the entire USSR is a very profitable enterprise, and there would be those who would like to take the entire USSR on a concession if we handed it over, but this probability does not exist, the USSR will not be handed over to a concession.

Therefore, the question of attracting foreign capital to us practically stands primarily as a question of such an organization of our ʺforeign tradeʺ as a result of which we would be left in the hands of large and all the accumulated remnants of foreign capital transferred from abroad, which fell into our property, which we could then invest in the further equipment of our industry, transport, and agriculture.

If this is so, then the nature of the economy of Europe as a market, from where we must transfer this capital to us, i.e., whether the European economy is shrinking more and more or expanding, is of very significant importance to us. In fact, the totality of bourgeois European states is and can be:

1) an ever‐growing market for the placement of Soviet goods and

2) a market of the kind in which we have and will have the opportunity through foreign trade to mobilize large capitals for our investment in our economy in general and in our industry in particular.

From this follows, along with other circumstances, first of all, the extraordinary significance of the level of precisely European prices for hre objects that we export abroad. Here we come to the chain of difficulties with which the 1925/26 financial year began (and which, in part, continued in the economic year 1926/27).

This chain of internal difficulties is still remembered by everyone. It began with the fact that in our country the procurement of items for export, primarily the procurement of grain and other items of agricultural production, stumbled upon high prices for them in our country and for an insufficient supply.

We could not deliver to Europe the quantity of goods that we wanted, and the very export of these goods to Europe had to take place under such conditions that their domestic prices did not correspond to the prices of the foreign market and there was not a sufficiently large difference left in our hands.

This led to further difficulties—to a decrease in our accumulation of foreign currency reserves, to a reduction in

connection with this program of importing raw materials and new equipment from abroad to us.

In connection with this, there was a certain reduction (against the planned) rate of development of our industry and the impossibility of taking on the full load of such a number of new workers that we wanted to employ (and had already hired).

And also the impossibility of introducing new machines for the construction of further factories and factories and for the improvement of existing ones in such a size as was originally planned.

At the same time, high prices on the domestic market led to a reduction in the amount and mass of commodity circulation in the country in general, and thereby to a rise in the price of gold coins on the domestic market, which created, as stated in the resolution of the last party congress, ʺa threat stability of the red ruble”, i.e. created very significant difficulties, which led to the well‐known contraction of credits, and this, in turn, hit the further expansion of industry and agriculture.

This whole chain of economic difficulties began, therefore, if taken in chronological order, with the fact that prices on our home market are too high for our agricultural export items per dranitsa, i.e., for items of peasant production. .

These prices, in turn, were, as you know, a response to the high retail prices of industrial products that the city delivered to the countryside.

If we say that we have a significant convergence of industrial price indices and agricultural commodity price indices compared to what it was in 1923, then this is fully true only for the city.

In the countryside, this distance remains very large at the present time. In March 1926, the Trade and Industrial

Newspaper published a calculation of the ratio of indices based on the materials of the Peopleʹs Commissariat of Trade in the provinces of three regions: flax‐growing, potato‐growing, and dairy.

Here we take the ratio of the index of goods sold by the peasant economy of these regions to those goods of industrial origin that the peasants buy.

It turns out that as of January 1, 1926, for the flax‐growing region in the countryside, this ratio was only 66%, for potato iodine, 66%/r, and for dairy, 79%/r. Here are taken the provinces: Tver, Samara, Novosibirsk, in a word, provinces from different parts of the country.

The reason for the large difference between the prices of our industrial products in the city and the prices of these same industrial products in the countryside is that, while the average markup of co‐operatives, according to the Central Union, on October 1, 1925, in the countryside, in rural cooperatives was 47% over wholesale factory industrial price ‐ for private retail rural traders it was at least 100%, and sometimes increased for some types of goods and higher.

These extra 50 per cent, which the private trader added to industrial goods when they were sold in the countryside, first of all created high prices for industrial goods there, to which the peasant responded with high prices for his grain.

For, as we have seen, two‐thirds of industrial products are obtained by the peasants from private hands. Especially large are the capes in that greater part of the villages where there are no co‐operative shops which could compete with the private trader.

After all, even in cities where there are competing cooperatives nearby, a private trader has a much larger cape than a cooperative one.

According to a report by Comrade Mikoyan in February 1927, in 25 provincial towns, the cape on chintz in co‐operatives is 15%, and in a private trader, 73%; salt from a private trader is 38% more expensive than from cooperatives, nails are 22% more expensive, etc. in cases where it has no competitor in procurement in the person of state agencies and cooperatives. The review of the Peopleʹs Commissariat of Trade for the first quarter of 1926/27 of the financial year cites the state of the procurement market for raw hides and skins in Siberia as an example of such relations (p. 12).

All this expresses the participation of our bourgeoisie in the distribution of the national income. It must by no means be thought that the entire sum that private merchants earn in the countryside is the property of these village merchants alone.

Quite often they act under the leadership of the larger bourgeois merchants of the city, they are, as it were, their

ʺindependentʺ clerks, and, perhaps, the lionʹs share of the income goes right into the pocket:

the urban bourgeoisie, which supplies them with urban goods and buys rural goods from them.

The very organization of trade for private traders, as a survey of the Peopleʹs Commissariat of Trade has shown, costs no more than cooperation. If the private trader overpays a little in taxes (we shall see in the section ʺPrivate Capital and Taxationʺ that not so much as is sometimes thought), he gains a great deal in the absence of the cumbersome apparatus that cooperatives have.

He also benefits from the absence of those waste and theft that exist especially in the grass‐roots cooperative organizations in the countryside, because the private merchant is not stolen from the side, but he puts it in his own pocket. Therefore, if cooperation is limited to a cape of 47% and makes a profit, then a private merchant for his business, considering normal profit, needs no more. The remaining 50%, which he spends in the countryside on industrial products, and in the city on food products of agricultural origin (since he throws only 100%), remains a net surplus income, super profit, the share of the commercial bourgeoisie in the national income of the CCCP.

Here we come, in my opinion, to a point which may shed some light on the social root of some of our economic difficulties. In the USSR there is now a cohabitation1 primarily of two economic forms: on the one hand, the private commodity economy of the bourgeoisie and the peasantry, and on the other, the planned economy of the proletarian state, albeit in commodity forms.

With the cohabitation of these two species, we have in one region a commodity economy, so to speak, to the marrow of the bones ‐ this is a bourgeois and peasant economy; and on the other hand, an economy that is essentially planned (socialist planned), but in commodity forms (state).Here we have sufficient data to enable economic crises to occur in general, arising from its commodity nature in one part and the commodity forms in which another part of it proceeds.

If our economy as a whole were (non‐commodity) of the same type, i.e., if it were entirely the planned economy of a proletarian state, then one could consider that ordinary commodity crises cannot and should not occur in our country, that here there can only be errors in plans, ʺmiscalculationsʺ, etc. However, since we are now dealing with an economy of the current transitional type, crises in a commodity economy (of the

European type) may also occur in our country. But once in 1925/26 there were no data that would make such a crisis necessary.

Such data can be searched in three directions. The connection between our planned economy and the commercial, unplanned economy of our countryside is the first source that can introduce confusion into our planned economy and create crises in it. Secondly, we must take into account the connection between our state economy and the economy of the foreign bourgeoisie.

If our country is noticeably connected with the economic situation abroad by a number of economic threads and trade relations, then a change in the situation in the foreign market, a strong change in prices, the volume of trade, the onset of a crisis or prosperity there—all this will also affect us through foreign trade. , and we will experience some of the impact of all this. And finally, the third line along which economic difficulties and upheavals can set in is the inconsistency within our planned economy, i.e., those ʺmiscalculationsʺ, mistakes, etc., which we usually talk about. But precisely with regard to all these three ways in which an economic crisis can come to us, in the financial year 1925/26 things seemed to be more prosperous than before. If we take relations with the countryside, then the level of well‐being of the countryside, the level of its possible demand for industrial products, the level of its own production, was, as is known, much higher than in the previous year. If we take our relations with the bourgeois economy abroad, they have not acquired such a scope as to be decisively reflected in the conjuncture of our economy.

For example, even the unprofitability of various types of exports, etc., could not stop the development of our economy. We are just entering into a relationship with the world economy, we are only in the process of entering, but we have

not come close and closely so that the world crisis will spread to us directly and in the same size. In general, I think that thanks to the peculiarities of our system, world crises in general will affect us more weakly—precisely due to the centralized planned character of a significant part of our countryʹs economy.

And finally, on the third point, regarding the inconsistency in our own plan, then in 1925/26, in general, if we compare them with our usual practice, they turned out to be even more perfect than before. A good example is the state budget.

At the beginning of the economic year 1925/26, with good prospects for that year, a state budget plan was drawn up for 4,000,000,000 rubles of income and expenditure per year. Then, after numerous checks, doubts, etc., the budget was only fulfilled by about 100 million rubles less. If we consider this reduction by 100 million rubles. error in the original budget plan, it is only 2.5%.

This is such a mistake that no one would have mentioned or noticed two or three years ago, everyone would have thought it was a typistʹs misprint.

In the same way, if we take the development of industry, it was supposed to develop industry by a little more than 40%. As a result of the curtailment of plans that was made in some branches of industry in connection with the reduction in imports of raw materials and equipment from abroad, the deployment turned out to be somewhat less. Still, the industry grew by almost 40%. The mistake is also not God knows what compared with those that happened in previous years. In terms of planning errors and miscalculations, with the exception of a number of preparations, the situation was better than we had been accustomed to in previous years.

Thus, it is necessary to look for explanations of the current economic difficulties not only in miscalculations, and not in the upheavals of rural production, and not in the reflection of the influence on the Soviet economy of the crisis that has engulfed some foreign states. And if these difficulties are not a sign of a general, ordinary crisis of the commodity type, then, then, they must be explained by some peculiarities of our Soviet economy and the current transitional period.

The main feature of the economy of the transitional period, as is well known, is that we are running a proletarian state economy in the presence of a link with the peasant economy, to a large extent through the commercial bourgeoisie. Here I am looking for explanations for a number of our difficulties and discrepancies. It is not necessary only to understand these things somewhat one‐sidedly.

It may be appropriate to make the reservation that when I speak of the role of the internal bourgeoisie in our economy as the carrier to a large extent of the commercial bond between town and country, this does not mean that with the presence of this economic role of the bourgeoisie, further industrial development is impossible in our country.

This does not mean that in this situation it is impossible for us to further accumulate socialist elements in our economy and increase their preponderance over non‐socialist elements. It only means that, given the role of the commercial bourgeoisie in our country, the growth of the socialist elements in our economy is proceeding at a slower rate and will proceed at a slower rate than if we had the opportunity and would devote more attention and resources to reducing the role of bourgeois trade in our country and to oust it by co‐operative and state trade.

Peasants, selling the products of their farm, are considered:

1) with the amount of taxes that they must pay, and

2) with the number of industrial products that they can buy with the proceeds from their products.

When we have such a correlation that the price index of agricultural commodities in the countryside for a number of important items is only two‐thirds of the index of industrial prices in the countryside, then the selling part of the peasants must draw from this the two conclusions that they did: on the one hand, limiting in every possible way the consumption of expensive industrial products only to the most necessary minimum, and on the other hand, into a sevenfold inflation of prices for their agricultural products, for grain, etc. Such is the reverse side of the broad participation of the bourgeoisie in trade with the countryside and in trade within the village ).

The bourgeoisie, by its participation in trade, participates in the division of the ʺnational incomeʺ, the rest of which goes to the peasants and workers. This ʺparticipationʺ is thus the main reason for the high cost of goods in the countryside, which far exceeds its level in the city and in rural, but cooperative trade. The task of making manufactured goods cheaper in the countryside, therefore, is not a task of a technical nature, but a social task, the old question of a more complete transition of the commercial link between town and countryside from the hands of the bourgeoisie into the hands of a worker‐peasant agreement.

So far, the cooperatives have not been able to replace private retail trade in the countryside, since there was nothing to replace the significant circulating capital invested by the bourgeoisie in this business. In order to make the private trade supply of the countryside unnecessary, the state (and the peasantry) would need to invest hundreds of millions of rubles more in consumer cooperatives (and strengthen the

cooperative distribution network). The state has not yet been able to allocate such funds for a long‐term loan to the cooperatives, and hence the high cost of manufactured goods in the countryside, with all its economic and political consequences.

It is a matter of means, not of any innate, irremovable advantages of private trade. Vladimir Ilyichʹs well‐known remark that the proletariat will have to undertake the financing of the co‐operative system in which it is interested relates directly to this. The slowdown in the rate of economic growth in 1925/26 in comparison with what was expected emphasizes the importance for us of the practical conclusions from this remark of his:

“If we now grasp this link firmly enough, we will certainly master the entire chain in the near future” (Lenin).

The peasantry responds to the high prices of manufactured goods in the countryside with high prices for the products of the peasant economy. This, firstly, reduces procurement against the plans desired by the state, secondly, it makes export abroad unprofitable, and thirdly, it compresses trade in general.

Peasants buy fewer industrial goods for a smaller quantity of agricultural products than they would if the prices of both were lower. Part of the grain, etc., remained unsold, and if to some extent it was used to increase livestock (fattening young animals), then to a sufficient extent lay just “dead capital” instead of being turned into tractors, into iron and other items necessary for the development of rural economy.

Industry, in turn, could not employ as many additional workers as it would have if the lower price level of urban and rural goods had helped to increase their quantity in trade.

And a quantitatively compressed (in terms of the number of items) trade turnover is inevitably accompanied by a rise in prices in a vast area of private non‐planned economy (and, reflected, also in the state planned economy, insofar as it is supplied from the private sector with certain types of raw materials, foodstuffs, etc.).

This circumstance, while lowering the purchasing power of the ruble, leads to a significant increase in the difference between the purchasing power of the red ruble within the USSR and the purchasing power of foreign currency (dollar, pound) abroad in relation to the corresponding pre‐war purchasing power of gold. Due to this, exports would probably become unprofitable or very little profitable, even if! for other reasons, domestic prices for agricultural products did not soar in our country above the foreign level.

For abroad, the real purchasing power of a dollar is about two‐ thirds of the pre‐war purchasing power of an equal amount of gold, while here the real purchasing power of a rupee ruble (due to excessively high retail prices) is only about half the pre‐ war purchasing power of an equal amount of gold.

The ratio in the case of the rupee ruble is thus a full quarter less than in the case of the dollar, while the amount of gold in the rupee ruble and in the dollar is the same as it was in the ruble and dollar before the war. In order for the export to be profitable for the peasants, it is necessary, therefore, to accept at the expense of the state the difference between the purchasing power of gold at home and abroad.

This means either selling abroad at a loss to the exporting state agencies, or giving them a bonus from the state budget to cover losses during export (the same applies to the export of timber, etc.), so that they can pay the peasant the full ʺinternalʺ price, although it is higher than the border. According to the estimates

of the Peopleʹs Commissariat of Trade, out of all the exports that we produce in 1926/27, 448 million rubles are profitable. and for a loss‐making 345 million rubles, including a heavily unprofitable about 235 million rubles. In 1926/27, bonuses alone to cover losses, according to Gosplan estimates, require about 50 million rubles. ʹ

It is known that since the time of the monetary reform (winter 1923‐1924) there has been a free exchange of the red ruble for gold. This was carried out, however, not in such a way that each person could come with his chervonets to the cash desk of the State Bank and receive an equal amount of gold by weight. This was done in the form of exchange of chervonets for dollars at parity (that is, according to the pre‐war ratio of the weight of gold in the pre‐war ruble and the pre‐war dollar) legally allowed by the government and carried out by the State Bank.

And the dollar is gold. You can now get the same amount of gold for a dollar abroad as before the war. This means that since 1924 we have had an exchange of chervonets for gold, and we stabilized (established) during the monetary reform the chervonets at a level that corresponds to the average world purchasing power of ʹgold, i.e. gold, which were in the pre‐war ruble. Meanwhile, due to high retail prices, our real purchasing power of chervonets is a quarter lower than the average world purchasing power of gold (in relation to the pre‐war one). For the stability of the currency, we must now maintain the “parity” exchange rate of the chervonets in one form or another, firstly, within the country, either by achieving a general reduction in prices, or by continuing to exchange it for gold or dollars at parity, i.e., passing off not a 33 dollar for a chervonets as it should! would correspond to the actual purchasing power at retail prices, and 5 dollars, as follows from the ratio of the weight of gold. This means overpaying out of pocket Ü/i! dollar, i.e. 2‐2 rubles per chervonets.

Such a path, of course, is unprofitable—a pure loss, and it took a lot. Secondly, we must maintain a parity ratio in the foreign market by exporting at unprofitable export prices for us (with the payment of certain premiums at the expense of state funds to those state bodies from which we receive products for export, or at a loss for the state in the person of these exporting government agencies themselves).

Consequently, the chain of events was as follows: a higher level of retail prices in the countryside for industrial products caused the countryside to a higher level of prices for agricultural products. And the increase, therefore, in the general level of retail prices meant a decrease in the purchasing power of gold in chervonets. In other words, the role of the commercial bourgeoisie in the distribution of the national income (by organizing a trade link between town and countryside) actually leads to the necessity of measures of little benefit to the state to maintain the parity rate of the chervonets both in foreign relations and within the country, which costs the national economy a certain amount.

Otherwise, it is not possible, under the present situation, to make the sale of agricultural products for export to the peasant equally advantageous as their sale to the home market. But buying the same bread, flax, etc. at two different prices, of course, is impossible. To compel the peasant to lower the prices of agricultural products by 250/0 in general is not a pony; and the size of his expenses for the payment of purchased manufactured goods and the taxes levied (which he must produce on the proceeds of his products), it would be very difficult.

Even if the peasants were forced to such a unilateral reduction by any measures of pressure, the result (at the current retail prices in the countryside for manufactured goods) would inevitably be a major reduction in the peasant demand for

manufactured goods, with all the economic difficulties that follow from this for industry and for the state. and political complications.

Refusal, under conditions of peaceful construction, to maintain the parity of the ruble ruble, i.e., the rejection of a stable ruble, would bring enormous harm both to the proletariat in particular and to the state economy as a whole and would be a heavy political blow to us. Again, a systematic, continuous depreciation of wages would begin, the impossibility of stable economic accounts, etc. Therefore, such a path is unacceptable. And then, with the existing retail prices for manufactured goods and agricultural products in the countryside, we are left with (since the rejection of all exports and the desire for complete economic isolation of the USSR is also unacceptable for us) or none of the costly systematic payment by the state of these two benefits and, firstly, export and, secondly, by supporting the parity exchange of the dollar and chervonets on the domestic free market, or to achieve a reduction in the general level of retail chains in the country by about 20% against their level in 1925/26.

It is easy to understand that the cost of these two bonuses essentially means a completely unproductive pumping out of a significant part of Soviet funds for a double premium of the bourgeoisie ‐ external (taking on the difference in the purchasing power of gold) and internal (maintaining the exchange rate red ruble on the internal free market).

The role of spending on both bonuses will thus approach that of the payment of interest on state loans in the pre‐war budget.

We canceled the loans, and now with these premiums, although in a smaller amount, in a different form, we are paying tribute to the bourgeoisie (in addition to the indemnity that it itself takes from our national income by concentrating in its hands,

on the one hand, the sale in the countryside of a certain part manufactured goods, and on the other hand, buying up the products of the peasant economy in the same place).

Both types of bonuses socially strengthen our opponents. There would be no prospects here if the rural trade remained for many years predominantly in the hands and under the leadership of the bourgeoisie, and therefore the present level of retail prices were maintained. In order to ensure the possibility of export (necessary for obtaining certain types of raw materials and equipment) and to ensure the stability of the chervonets inside the country, we would then endlessly have to pay both these bonuses to one degree or another or incur corresponding losses, which would become more and more significant absolutely as absolute growth of our economy. It is much more expedient to use these same funds for the cooperative mastery of the retail trade in basic commodities and in this way to lower the general level of retail prices in the country.

Serious financial assistance from the state of cooperation through large long‐term loans to its fixed capital will give it the means to replace private trade in basic manufactured goods in the countryside and private buying up of basic peasant products. It is possible to reduce the village retail markup, as compared with the present markup of village private traders (and the city markup on the sale of foodstuffs by private traders) to such a level that prices will fall on the average by 20o/o, when this trade passes to co‐operation, it is possible without prejudice to co‐operation. The calculation is simple.

The wholesale factory price of manufactured goods is 100%. The private trader makes a cape of 100%. It turns out the village price of 20%. With a decrease in the level of retail prices by 20%, the price of manufactured goods in a non‐cooperative village will remain at 160% of the wholesale factory price. At the end of 1925, the cooperative cape was 47%, and in the spring of 1927

it was reduced relatively easily to about 35%. It means that there would be a surplus of up to 20‐25%. This surplus can be used to accelerate the repayment of state loans by the co‐ operatives and in this way to place them in industry.

A drop in the level of retail prices in the country by 20 per cent is nothing but an increase in the purchasing power of the rupee ruble to about 60 per cent in relation to the pre‐war purchasing power of an equal amount of gold. And since the purchasing power of gold (dollar) in the world market is 67% of the pre‐ war value, thatʹs it! rapprochement would thus provide a solid basis for the stability of the exchange rate of our ruble. The difference of 70/0 is one of those that, without much sacrifice on the part of the state, can be covered by the difference in the costs of producing export raw materials from a producer in the USSR and abroad in Europe.

Such a difference in our favor, if we exclude, from our internal price, the price of 25 r/o, which reflects the decrease in our purchasing power of gold against the world level (due to the indemnity imposed by the bourgeoisie through trade and buying), there is such a difference in our favor, even more than 7%, as all pre‐war experience shows.

But now it is completely extinguished by these 25% of the foreign exchange difference turned against us. And when the difference in currency (due to a decrease in the level of retail prices in the country) reduces to only 7%, then the difference in our favor in real production costs will certainly cover not only these 7o / o and overhead costs ‐ for export, but also leave a profit to the state, t i.e. make export profitable.

On the contrary, even a significant increase, for example, in the price of bread in Europe due to temporary (special conditions, which, without the current currency difference, would create a serious enrichment for the USSR, due to this difference can only

barely balance the unprofitability of exporting wheat, etc. And not to export impossible, since that would mean leaving the peasants without selling the products of their economy, and leaving the workersʹ state without foreign currency to buy foreign raw materials, which are necessary for the operation of a number of our factories, and without foreign machines for them.

The unprofitability of our exports has led to a contraction in imports of raw materials and equipment, to the need to slow down the rate of expansion of current production in comparison with the technically possible (the experience of 1925/26) and to restrain the program of new industrial construction.

Our mastery of the retail trade in the basic commodities in the countryside by lowering the price level, strengthening the currency, ensuring the profitability of exports, and increasing the demand for industrial goods in the countryside (thanks to their cheapening there), would both make it possible and necessary to increase the development of industry, both current and capital.

On the same basis, the question of a further increase in wages lends itself partly to resolution. If we leave the greater part of the commercial super‐profits which now remain with the bourgeoisie, after the transition from rural trade in basic industrial goods and the rural buying of basic agricultural products to co‐operatives, in the pockets of the peasants, then from the other part the share of the working class in the distribution of the national income can be correspondingly increased.

Of course, in the coming years we can talk only about trade in basic goods with a gradual coverage of various areas and branches of trade as the state invests new funds in this business.

The question of the sources of these funds can be fully resolved with a firm consciousness of the seriousness and significance of the question. Here we have the prospect of how to move towards bringing the level of purchasing power of our chervonets into line with the world level of purchasing power of gold.

This requires a general lowering of the level of retail prices, and this lowering of the level of retail prices is possible by excluding that share which constitutes the excess profits of the commercial bourgeoisie. The bottom line, therefore, is to reduce the indemnity that it imposes on all of us and thereby makes our chervonets to be below the average height of gold in the whole world and our exports to be unprofitable and our industry to be unable to develop at such a pace as this. it would be possible for her, but it also leads to other difficulties.

The solution of all five main Immediate tasks of our economic practice, therefore, rests on one and the same thing. First, making our exports profitable; secondly, the stability of the red currency, raising it to the world level; third, the expansion of industrial output; fourth, the provision of new capital equipment at the required pace; Fifth, a sufficient absorption of the unemployed cadres and ensuring the growth rate of wages—these are the tasks.

I will not dwell here in detail on wage growth, but it is obvious to everyone that wage growth does not miraculously occur, but can occur either through the redistribution of national income or through the creation by the working class of such additional values with helping to raise labor productivity, which will create an opportunity for this.

As for the increase in labor productivity, it is known that at the present time it rests mainly on the need to improve technology, to improve the condition of our technical equipment and to

introduce new machines, to restore old ones, etc., to the insufficient qualifications of our workers, i.e., in the lack of funds for their education, in improving their conditions of existence, so that they could better master the art of work, and finally in the waste of labor (not only absenteeism, but also due to poor lighting and other [irrational aspects of labor organization).

In carrying out long‐term work to increase labor productivity, it is necessary to fully take into account the immediate possibilities that the redistribution of national income in this sense can open up.

The transitional period in which we live in the USSR is distinguished by the fact that the class struggle is already being waged under the dictatorship of the proletariat. But our very class struggle against the bourgeoisie for socialism continues, it is not over yet, the division of society into classes has not yet disappeared, the economic role of the bourgeoisie and its economic opposition to the building of socialism have not yet been abolished in the USSR.

The forms of this struggle have changed, but in itself each step forward in the cause of socialist construction is set by life definitely as a task of class struggle in new forms, a rte as a simple technical task of successful planning in a society homogeneous in social structure. This must be kept in mind with complete clarity.

Ensuring the current and capital development of industry, the profitability of exports, the stability of the red currency, the growth of wages—all this, in the conditions of our transitional epoch, is the task of class struggle, only struggle in new forms: not by strikes, as before the revolution, not by arms, as during the revolution, not by arrests and, as in the era of the civil war, but by the economic ousting of the bourgeoisie from the trade

position it has seized. For such a substitution, money is needed (as for any war), funds are needed to replace with them the capitals of the bourgeoisie invested in trade. If, on the other hand, bourgeois trade is ʺforbiddenʺ without replacing its means with its own means and its activity with its own activity, then this would mean only c. corresponding part to stop the course of economic turnover in general.

It is precisely the role of the bourgeoisie in the business of selling and buying up the basic industrial and agricultural goods in the countryside that we run into. This is precisely the class position of the enemy, which can neither be bypassed nor bypassed, and without first taking which it is impossible to fully and at the necessary pace solve the question of the further industrialization of our country, i.e., the whole set of questions about the profitability of exports. , about the stability of the currency, about additional investment in the capital expansion of industry, etc.

Therefore, one of the most basic moments in our economic plan should be the allocation and search for funds for state assistance to the cooperatives with a view to a much more complete coverage of the rural market (both buying and selling), than is the case at the present time (and connected with this is the organization of the sale of peasant products in the city).

The plan would not have been sufficient if it had forgotten about this task, precisely about the task of ʺfinancingʺ the cooperative system, which V. I. Lenin emphasized with particular force in his last articles, which have the character of a political testament.

This clause of the testament, to which the testator himself, as is well known, attached increasing importance to the transformation of our economy under present conditions, must be carried out with ever‐increasing energy, with unflagging

firmness. Using the example of difficulties with the profitability of exports, the exchange rate of chervonets, etc., it should become quite clear even to those who did not fully appreciate this before, how right Vladimir Ilyich was in recognizing this item as decisive in our conditions (i.e., with cash we already have the dictatorship of the proletariat and its nationalization of industry, transport, banks, and foreign trade).

When the countryʹs state budget alone (except for bank lending) increases annually by about a billion, then it is so impossible to gradually find in a few years those hundreds of millions that are required to approach the problem of ʺcrucial importanceʺ, if only this is its decisive importance, oh which Lenin said, should really be assessed properly.

I am not concerned here with the organizational aspect of the matter—the difficulties of a wider development of cooperative work in the countryside, for example,1 in the sense of selecting suitable people, in the sense of limiting abuses, etc. These difficulties are undeniable, but surmountable.

In the first place, even now our co‐operatives, for all their disorder, trade in the countryside cheaper than private merchants. Secondly, if tsarism was able to organize the ʺstate shopsʺ that regularly traded in the villages, then there is no reason to think that we Bolsheviks will be able to organize in the end; our (cooperative) shops are even more successful than tsarism in the villages. There would be funds, and the rest is a matter of experience, study, and organizational skills. And the lack of organizational talent seems to be the only vice that our opponents have not yet attributed to us.

It may be that not all practical proposals for finding funds that can be put forward will be recognized by everyone as successful, but in any case it is time to raise this question practically on the proper scale, because with small handouts of

cooperation of tens of millions a year we are far from quickly solving the problem, letʹs move on. It is necessary to invest 200,000,000 rubles a year in this business through banking and budgetary means in order to replace frequent trade (and its absolute increase) in all the main vital branches (not only in the countryside) during the coming decade. Secondary industries can remain in private hands for a longer time.

The real way of finding funds now is the way of redistributing the national income. It seems to me, however, that in this area the line of least resistance should run not in the direction of claims against the average rank‐and‐file peasantry, but in the direction of a decrease in the share of the merchant bourgeoisie and an increase in the share of workers.

All five of the immediate tasks I have indicated related to resolving the issue of the level of retail prices (exports, gold coins, industrial output, capital equipment, wages)—these five points taken together make up the bulk of what we mean by ensuring growth. industrialization of the USSR, than we solve the problem of the rural poor for more than half.

After all, the growth in the number of workers means nothing more than the pulling over of a certain number of the rural poor from the unfavorable conditions of beggarly existence in the countryside under conditions of a more human existence as a worker in industry, transport, etc. In recent years, we have had the following: in 1924/25, approximately 1% of the total population was transferred from the agricultural population to the non‐agricultural population, and in the 1925/26 business year, approximately 1.5%. This pace, if we supported it, would be the actual social essence of our countryʹs economic development plan for the coming years. Maintaining this rate for another 10 years, and instead of 20% of the population, which are workers and employees with their families at present in the USSR, in 10 years we would have at least 30%, which, of

course, would greatly increase both the strength of our regime and our role in the future world battle for the triumph of the socialist revolution.

The task of replacing the bourgeoisie by us, especially in rural trade, is thus far from being of secondary importance. To a large extent, the question of the rate of our economic development rests on it. If we donʹt take it seriously enough, then we wonʹt care too much about solving it. We will consider that for us the main thing is only large‐scale industry, banks, foreign trade, wholesale trade, transport, and rural retail trade is, they say, not a commanding height.

In reality, however, trade in wood is one of the Commanding Heights in our economy, and the experience of 1925/26 sufficiently illustrated this significance.

It must be understood that the solution of the fundamental questions confronting us requires, as a preliminary condition for accelerating the pace of our development, the solution of the problem of conquering this commanding height, the last of the major commanding heights (which still remain in the hands of the bourgeoisie. Therefore, by the way, are especially unacceptable there were proposals from the opposition (Comrade Pyatakov, Comrade Smilga, and others) to withdraw Soviet funds from trade.

Annual additional leave but 200 million rubles. to win this commanding height instead of such a ʺwithdrawalʺ—of course, such things are not done so quickly, experience must first be accumulated more, thought out, generalized, digested. Immediately, this, with lightning speed, is not done.

But the task itself must be set. Without setting this task, without drawing public attention to it, without understanding that it is not only a matter of miscalculations that the level of retail prices is a task of paramount importance, that it can be solved not by

technical, but by solving a social problem—without this we will not speed up the pace of our industrialization.

It does not follow from all this, however, that without the replacement of the private owner in the countryside by cooperation, our industrial development will generally be over, that it will only go through a stump.

Such panic would be inappropriate. The fact is that in Soviet economic development there are so many conditions of power, which we quite often underestimate, that even with an insufficiently clear understanding of this immediate task, with insufficient concentration of our attention on it, even with further leaving retail trade in the hands of the bourgeoisie and for the next for a number of years, nevertheless, we have undoubtedly been assured of even faster growth (industry than is currently assumed by planning bodies, judging by the ʺfive‐ year planʺ of the Supreme Economic Council, discussed at a meeting of industrial planning bodies in June 1927, and according to ʺ Materials ”of the State Planning Committee of the USSR for the five‐year plan, published before.

Let me remind you of one prediction that I allowed myself to make in 1922/23. Then we were in the second year of economic development after the end of the war.

In 1921, the Congress of Soviets adopted a plan for the restoration of the economy, the so‐called GOELRO plan, based on the fact that the pre‐war level of our industry would be reached by 100% only in ten years, by 1931. Then, in 1922/23, On the basis of the analysis given in the report, if I am not mistaken, in the Business Club, I pointed out that, given the state of our economy and the objective possibilities that lie in it, we (in the absence of a new war) will reach 100% of the pre‐war level of industry and wages, not in 1931, but four or five years earlier, i.e., approximately in 1926/27.

Now we know that the level of output of our industry in 1926/27 is by no means less than the 100% that I foresaw at that time; poshest to this level and salary.

Meanwhile, when I made these ʺpredictionsʺ (for example, when I wrote about wages in Rabochaya Gazeta, etc.), a number of comrades were greatly affected by this and spoke of

ʺfantasies and castles in the air.ʺ

Since these castles turned out to be from such “air” that can serve as a reliable building material (for we reach 100%! Not in 1931, but really in 1926/27), since I am now with even greater confidence—because now our economic life has been much more studied—I can expect that the growth of the output of our industry will be ensured even more than expected by the planning authorities (in the absence of war) even in the event that rural procurement and the supply of village manufactured goods remain in the hands of private trade to the present degree still for a number of years.

Consequently, we will not perish, we will not perish, the process of industrialization will not stop unless private trade is driven out of the countryside with lightning speed. But we will increase the rate of our industrialization and its security, we will strengthen our economy, we will make unnecessary expenditures on covering the unprofitability of exports, on maintaining the exchange rate of the chervonets, etc., we will make all these conditions more favorable if Let us devote more attention and resources to the task of winning the position of the retail trade, to wresting it from the bourgeoisie in favor of the co‐operatives. By the way, industrialization itself will become cheaper then, by the way. Meanwhile, a lot depends on the pace of development and its security.

If the process of industrialization does not stop in our country, provided that the bourgeoisie participates significantly in trade

with the countryside, then the rate of growth of this industrialization will still lag behind what is possible if the bourgeoisie is forced out of this position.

We sometimes—precisely due to the prevalence of the misconception that Europe is in a state of increasing decline in its economy (while Europe, on the contrary, is in a state of gradual development, considering that it is not particularly important, we have developed by 5% or 10% per year. In this respect, Comrade Bukharin recently stressed with particular energy that the questions of tempo are questions for us, the importance of which almost no other can compare with. I have taken the rate of our economic development over the past five years and, on the other hand, the average rate of economic development of the bourgeois states over the same years. Our pace is relatively faster, but our absolute values are negligible.

Therefore, if we look at what our share in world output will be in another five years, while maintaining the pace that both we and they have, it will turn out that) our share in world output, it is true, will increase, double, but on a number of important points will still be extremely insufficient. In the extraction of electrical energy, for example, in 1925 we had 1% of world production, and five years after that we can have up to 2.5%. In terms of the number of cars, we will have 0.26%, i.e., an increase of 2% times against (the current one, absolutely very large (all according to calculations made in the Gosplanʹs sector of the world economy), but much less than would be desirable.

After all, our (USSR) population is almost 8% of the worldʹs population.

In order to be able in the future to provide major active assistance to the European and world proletariat in those great battles and wars that will confront it over the next ten to fifteen years with perfect historical inevitability, in order to provide it

with the greatest guarantee of rapid success, we need to increase the pace in every possible way. our economic development. And in order to speed up the pace of economic development, we must remove from our economic body that thorn in it that now exists in it in the form of bourgeois trade, sitting between the peasant countryside and the proletarian city. Private capital, on the other hand, should be used in other areas of the economy, in house‐building, etc. (since it will not be placed at the disposal of the state by tax authorities). You can also freely leave in his hands some secondary branches of industry and trade, new concession enterprises, etc. (see the section on industry), but not retail trade in basic goods and consumer goods (and even more so, of course, wholesale purchase of these items and their supply).

There are assertions that, given the current size of industrial production, high prices in the retail market are inevitable, because consumers are willing to pay more if there is a shortage of goods. But those who uncritically, without any reservations, thus transfer onto the economy of the Soviet system the economic rules and laws inherent in the bourgeois system are judged incorrectly, too simplistically, and even flatly even.

Such a vulgarization is precisely the idea that, given the disproportion (in the sense of the country being less saturated with manufactured goods than with agricultural goods), the prices of manufactured goods in the countryside must necessarily be very high, which is why it is hopeless to strive “to achieve a serious reduction in prices there until industry develops additionally very significantly.

This means a complete disregard for the existence in our country not only of the private bourgeois, but also of the state‐ cooperative system of exchange and distribution. And the latter gives the full possibility of limiting prices within its limits below that exploitatively elevated level, which they achieve in

conditions of insufficient supply when it is concentrated in the hands of the bourgeoisie or with the leading significance of its practice in the market. But in order to put this limitation into practice, in order to use the possibilities which the Soviet system provides, this sector of the trade front must be taken into Soviet hands and these hands (co‐operation) themselves must be well organized at the same time. The intensification of the economic struggle to replace the bourgeoisie on the main lines of the trade link is the key to resolving a number of our difficulties, a necessary prerequisite for more successful industrial and socio‐political construction.

Dynamics and activities.

The main thing in the dynamics of private trade in the USSR over the last five years (1922‐1927) is that during this time the share of all goods passing through it from the composition of the total commodity mass of the country has significantly decreased. Not only did its share in the total turnover of goods (i.e., in the sum of all transactions, including repeated ones—according to Narkomfinʹs tax data) decrease, but the relative share of all products passing through it also decreased.

If we take the total, what part of all industrial and agricultural/ household goods together (except for intra‐ peasant turnover) the population received through private retail in 1922, then this share will exceed 80%. Meanwhile, in 1925/26, as we have seen, it was already only about 50%. This difference can be used to measure the success of the state and cooperation in replacing the intermediary role of a private trader with their activities. The successes are exceptionally large for one five‐year period, if we remember that they were achieved in the

main not by prohibition, but by economic substitution, by the economic victory of private trade.

Accordingly, the role of private wholesale trade also increased in the sense of reducing the share of the total mass of goods that passed through it.

Of course, that part of the taxable commodity turnover (the amount of transactions, including repeated ones), which fell to the share of the private trader, also decreased.

In only two years, from 1923/24 to 1925/26, this last figure (according to Gosplanʹs Control Figures, p. 374) fell from 59% to 39% for private retail trade and for private wholesale trade. —from 22% to 9.4%.

It has already been explained in detail above that these figures do not in any way coincide with the percentage, which shows what proportion of all goods goes through private trade (15 percent must be thrown in to paralyze the influence of the abundance of repeated transactions in state and cooperative trade).

But they give an idea of the trend, of the direction of development. For both a few years ago and now in the structure and functions of state trade there were the same features that create a discrepancy between the percentages in the sum of turnovers and the percentages in the mass of goods. But besides this, there is also the direct information cited above about a decrease in the share of private traders in the very mass of all goods carried through trade, including those specially on the broad market.

This retreat of private trade in the face of the growing economic power of the state was, of course, neither uniform in all parts nor continuous. Such complex economic processes do not occur in such a straightforward manner. The retreat itself took place, for the time being, not by reducing the absolute value of private trade (the number of goods, the amount of turnover), but by reducing its relative share with absolute growth. This means that with the general upsurge of the entire economy of the country, with the general growth of all trade, state and cooperative trade grew faster than private trade.

Five years of experience gives a rather impressive reverse result in the form of a serious relative decrease in the role of private trade in the country. And in modern times, the time will come for an absolute decrease in the number of goods passing through it and the amount of its turnover.

The uneven retreat of private trade before us was manifested in its unequal absolute growth in three different directions. These data show, at the same time, which areas of activity it clings to most stubbornly and where our efforts should primarily be concentrated.

First, in terms of the absolute sum of turnover from the first half of 1923/24 to the first half of 1925/26, private trade in the countryside more than doubled, while in the city it even decreased slightly, by 8% (p. 21 of the collection of the Peopleʹs Commissariat of Trade ʺPrivate Trade of the USSRʺ).

Secondly, in general, the rate of absolute growth of private wholesale trade is much greater than that of retail trade. I already cited from Gosplanʹs Control Figures (p. 374) that from 1924/25 to 1926/27, in two years, private wholesale turnover increased by 80%, and private retail turnover only by 33%.

Thirdly, in the trade in state products, the absolute turnover of private trade fell, while in the trade in non‐ state‐made goods (peasant, handicraft, capitalist), on the contrary, they increased significantly (the exception is the procurement of grain, where the share of capitalist buyers has decreased). The decrease in the absolute size of turnover with state‐produced goods occurred in connection with the almost complete displacement of the private trader from mediation between individual state enterprises (very common at the beginning of the NEP) and in connection with the recent significant increase in the transfer of manufactory and some other state products through cooperation.

As regards the lack of continuity in the pace of ousting private trade from the countryʹs commodity circulation, one moment of the most energetic pressure can be established (after the crisis of 1923/24, which led to an accelerated decrease in the share of the private trader by 1924/25) and one moment of relative stabilization of private trade. networks and trade itself (this was observed in 1925/26, when the percentage of the network and partly of turnover attributable to the private trader increased). In the aforementioned collection of the Peopleʹs Commissariat of Trade, ed. comrade Zalkind developed

the relevant data of Narkomfinʹs tax information, from which we take the main illustrations (pp. 160‐163) of the indicated movement. Firstly, the dynamics of the urban network. The share of private traders among the total number of trading establishments of the corresponding categories was:

1st and 2nd 3rd, 4th and 5th grade

July‐October 1922. . .	99.3%	83.5%
October 1924‐March 1925	94.4	65.8
April‐September 1926. .	96.5	66.2

Second, the dynamics of the rural network. The share of private traders among the total number of trade establishments of the corresponding categories was:

1st and 2nd 3rd, 4th and 5th grade

July‐October 1922. . .	97%	65.2%
October 1924‐March 1925	93.5	32.1
April‐September 1926.	97	38.9

We divide all the data into two groups: capitalist trade (3rd, 4th, and 5th digits) and non‐capitalist private trade (1st and 2nd digits—pedlars and kiosks). However, for each individual category in particular, the same dynamics is obtained, with the only exception for only one half year for only one fourth category (p. 160 of the collection).

A similar movement—a rapid fall from 1922 to 1925 and a significant slowdown in the fall and a partial increase in 1925/26—we have in terms of total turnover in private

trade. Reporting data about them for; 1922‐24 are available in the collection of the Peopleʹs Commissariat of Trade (p. 163) and for 1924‐1926 ‐ in the review of the member of the Presidium of the State Planning Committee V Groman ʺControl ʺfigures and realityʺ (in ʺEconomic Lifeʺ of April 2, 1927). Unfortunately, these data are not disaggregated by categories and between urban and rural areas, but still give a sufficient idea of the general nature of the changes and their pace. All data are based on the tax reports of the NCF; therefore they are quite homogeneous and comparable. The share, i.e., the percentage of private trade turnover in the total trade turnover of the USSR, was, according to these data:

1922/23	55,9 %
1923/24	45,9
1924/25	29,6
1925/26	27,7

It should be noted that the reporting data for the last two years show some of our underestimation of the degree of resistance of private trade to its displacement. Between the control (i.e., supposed, design) figures of the State Planning Commission and between the reporting data (i.e., what then turned out to be in reality) turned out to be for; 1925/26 significant difference. The share of private trade in the total trade turnover for 1925/26 is:

According to ʺCheck Digitsʺ. 24% reported 27.7%

I donʹt know how Gosplan worked out the tax reporting data of the NKF for 1924/25 and for 1925/26, which

Comrade Groman uses in his review. The immediate reporting data of the NKF for these two years, presented by Comrade Frumkin to the said commission, emphasize even more sharply the fact of the relative stabilization of the turnover of private trade in 1925/26 in comparison with the previous year.

According to these tax data of the NKF for 1925‐1926 (corresponding to actual trade for the period from April 1, 1925 to April 1, 1926), the absolute growth of each of the three types of trade separately amounted to:

Cooperative.............. +14.1%

State.......................... +14.8%

Private...................... +43.7%

In other words, the growth in the turnover of private trade in the last accounting year—for the first time in a number of years—was faster than the growth in cooperative and state trade, three times faster. Due to this, according to the same NCF data, over the same year, the share of cooperation in the total trade turnover of the country decreased by almost 1‐2/3%, the share of the state also decreased by almost 2‐1/3% (and is 50.8%) , while the share of private trade, on the contrary, increased by almost 4%.

The relative stabilization (according to Gosplan) or the relative growth (according to Narkomfin) of the turnover of private trade in 1925‐1926, which distinguish this year from previous ones (and correspond to the character of the

change in its network described above), is explained by two circumstances.

Firstly, 1925/26 was a year of marked increase in the gap (distance) between state industry selling prices and private wholesale and retail prices in the direction of increasing the private ownerʹs income. The private trader could use market conditions and therefore tried in every possible way to increase his turnover, especially since taxation, as we will see below, was not in this respect, for him, such a great obstacle as is sometimes thought (see the section ʺPrivate capital and taxationʺ).

Secondly, in 1925/26 the process of shifting capitalist trade into the buying up of handicraft and peasant products and into trade in them and products of private industry developed especially intensively (which continued into 1926/27 as well). The relative revival of handicraft and capitalist industry this year also had an effect here (in the section on industry, the Supreme Council of National Economy provides a report on the growth of 65% per year in the private licensed and concession industries taken together).

As for 1926/27, tax reporting data on turnover cannot yet be available. We can expect the same processes to continue this year, i.e., on the one hand, the closure of private firms that legally trade in state‐owned manufactory, and the further significant expansion of private trade in so‐called ʺperishableʺ food products (vegetables, meat, butter, eggs etc.), timber, building materials, handicrafts, and similar non‐state products. Separate indications already available regarding 1926/27 seem to confirm this.

Thus, “Materials for the report of the State Planning Commission in the STO” on the economic situation (state), published monthly in “Economic Life”, report that in February 1927, compared with January 1927, private retail trade grew faster than state and cooperative; that in March 1927. compared with February, it again grew faster (private grew by 11.8%, and state and cooperative only by 8%; see Economic Life, April 30, 1927); that in April 1927, compared with March, it again grew faster than the state and cooperative (which grew by 4%; see Economic Life ʺof May 31, 1927). In particular, according to the RSFSR, according to the data of the Peopleʹs Commissariat of Trade of the RSFSR, ʺin April there is an increase in the turnover of urban and rural retail tradeʺ, and ʺthe turnover of state and cooperative trade has decreasedʺ, and along with this ʺa significant revival of private trade is notedʺ (ʺEconomic lifeʺ ).

Especially noticeable is the slowdown in the growth of cooperative trade compared to private trade—as in 1925/26—in the countryside. Thus, according to the report of Comrade Lyubimov, Chairman of the Centrosoyuz, at the All‐Union Conference of Workersʹ Cooperatives, during the first half of the 1926/27 financial year, the turnover of rural cooperatives increased by only 9%, while that of urban cooperatives by 33%, i.e., approximately in step with the general the growth of trade turnover in the country (ʺEconomic Lifeʺ of May 8, 1927).

Incidentally, even from some individual large urban centers one now comes across in the newspapers information about the relative stabilization of private trade in the current year 1926/27, and even sometimes about a slight increase in its share.

Here, for example, in Moscow, the “Control figures for the economy of the Moscow province” were recently issued signed by the chairman of the Moscow Council, comrade Ukhanov, in his brochure, which is called so.

There, on page 54, a certificate is given on the share of a private trader in retail trade in Moscow and the Moscow province and indicates that in 1924/25 it amounted to 33.4%, in 1925/26 it was already 36.0% and in 1926/27 it was even slightly higher— 36.5%. Of course, Comrade Ukhanov could not yet know the results of the entire 1926/27. Obviously, this is a planned assumption based on preliminary tentative data. Nevertheless, it indicates that private retail trade is expected to be relatively stable (even with a slight upward trend) even in Moscow itself.

Another example. From Dnepropetrovsk, a large Ukrainian center (former Yekaterinoslav), there is a telegram in Pravda dated March 23, 1927, that there the share of the working budget covered by cooperation and state bodies has fallen from 38% last year to 35.4% this year. year and at the same time the proportion covered through private traders increased accordingly.

From the Donbass (Shterovka), a cable was sent to Pravda on April 2, 1927, that there the share of the working budget covered by state bodies and co‐operatives had fallen from 47% to 38% in comparison with the previous year, and, on the other hand, the share covered through private merchants by the main way through agricultural commodities like butter, eggs, etc.

It can be assumed that the relative stabilization of private trade will end with the financial year 1926/27. This stems from two circumstances. First, in 1927, serious measures began to be taken in practice to reduce the gap between selling factory and retail prices.

As of June 1, 1927, compared with January 1, 1927, the general level of retail prices for industrial products had already fallen by approximately 6%, and this process will continue in the future.

Secondly, the changes that have taken place in the nature and direction of private trade in recent years are already being realized (a significant transition to trade in non‐state products, the special role and importance of wholesale trade, the uncharacteristic nature of the closure of private manufacturing firms for judging the general situation of capitalist trade, etc. ).

In connection with this, the comparatively unsystematic attack on private trade, so to speak, on a loose front, which has sometimes not given all the expected results, which has sometimes not yielded all the expected results, will be replaced by a more thoughtful, more planned, and more concentrated economic campaign on precisely those sectors of the front where at present The moment to focus attention is necessary. The improved financial situation of the state‐financial economy makes it possible to provide the ongoing activities and the necessary funds somewhat better.

Based on our previous presentation, the essence of the measures that have matured and are planned for gradual implementation can be formulated approximately as follows:

1) introduction of a plan for the economic displacement and replacement of capitalist wholesale and semi‐wholesale trade (establishing a priority order for the termination of its lending and supply in the relevant industries and regions, appropriate tax measures, etc.);

2) the reduction of commodity, money and advance credit provided by the state to capitalist trade, and the direction of this part of it for the development of cooperative procurement and cooperative supply;

3) strengthening state and cooperative procurement of the so‐ called ʺperishableʺ food products of the peasant economy (butter, vegetables, meat, eggs, etc.), and ensuring this work by

creating appropriate equipment (building refrigerators in large work centers, equipping special wagons for transporting etc.);

4) development of a state and cooperative organization for the sale (and supply) of handicraft labor industry;

5) ensuring the full actual observance of the greater favorability of consumer cooperation in comparison with the private owner (in particular, taxation), especially bearing in mind the importance of bringing industrial goods to the countryside precisely in a cooperative way;

6) more significant consideration in the plans of bank lending of the need to develop cooperative trade in the indicated areas than has taken place to date;

7) limiting the arbitrariness of private traders in setting prices by encouraging public control over them (up to a boycott for excessive price inflation) and creating a direct connection with a suitable part of the retailers to eliminate the influence of private wholesalers on them and to limit the level of their prices and incomes by relevant agreements; moreover, the share conducted in this way through private traders should decrease with the growth of organizational and other opportunities for cooperation.

It is not difficult to see that the totality of these measures should lead to a gradual actual limitation of capitalist and private trade in general only in capitalist products and direct sales by individual small producers to individual direct consumers. If we take, for example, the wholesale and semi‐wholesale capitalist trade in industrial products for 1925/26. , then this would mean reducing it to only 11.7% (capitalist output) instead of the 28% of the total mass of industrial goods that actually went through it.

At the same time, as the domestic system of capitalist industry was ʺdecapitalizedʺ, the part of the handicrafts that is now subject to capitalist industrial exploitation would still gradually be liberated.

And thus the share of the capitalists in the trade in manufactured goods would also fall significantly below 11.7% (because this also includes the products of the ʺdomestic systemʺ; see the section on industry).

If we take all private trade in agricultural and agricultural products (except intra‐peasant turnover), then the gradual implementation of the planned measures would mean a decrease in the share of purchases by the urban population of foodstuffs of peasant origin from private individuals from 75%, as it was in 1925/26, only up to 30% (the capitalist part of the procurement would have disappeared).

As further prospects (in life they are carried out in parallel, only at a slower pace), one can outline the transition of private factories and plants to sales only to state bodies and cooperative associations, and in agriculture, such a degree of marketing cooperation of peasants, under which personal sales by them would also disappear. bazaars and were replaced.

sales to the relevant consumer cooperatives and economic agencies. It goes without saying that all this is not done all at once, it takes time, organization, culture, and funds. But the general line is moving in this direction, and the next regular measures on the planned path are already quite clear. The necessity and possibility of their implementation have been tested and proven by life experience.

Even with an unsystematic, dispersed attack on private capital in trade, we nevertheless managed to achieve over the five years of 1922‐1927. to reduce its share in trade by at least half,

although not without difficulties, not without unevenness and interruptions in time.

Now, when the thoughtful experience of the past five years, the plan and new means are introduced into this matter, there can be no doubt that the coming five years will give us a no less rate of reduction in the share of private trade in the total mass of commodity output of the USSR.